Singapore, 25 May 2021 – The Ministry of Trade and Industry (MTI) maintains 2021 GDP growth forecast at 4.0 to 6.0 per cent amidst significant uncertainties arising from the COVID-19 pandemic. MTI will review the forecast again in the next quarter, when there is more data, and greater clarity over the global and domestic economic situations.
In general, the Singapore economy expanded by 1.3 per cent on a year-on-year basis in 1Q 2021, a reversal from the 2.4 per cent contraction in 4Q 2020. On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 3.1 per cent, extending the 3.8 per cent expansion in 4Q 2020.
The construction sector contracted by 22.7 per cent year-on-year, improving from the 27.4 per cent contraction in 4Q 2020. The performance of the sector was weighed down by declines in both public and private sector construction works. On a quarter-on-quarter seasonally-adjusted basis, the sector grew by 5.0 per cent, extending the 55.6 per cent expansion in the fourth quarter.
Within Southeast Asia, economies such as Malaysia, Indonesia and Thailand are projected to rebound in 2021 from the contractions in 2020, supported in large part by external demand. However, the extent of their recovery hinges on their respective COVID-19 situations. While the number of new COVID-19 infections has appeared to stabilise in economies such as Indonesia, others like Malaysia, Thailand and Vietnam are grappling with a resurgence of infections, which is likely to be a drag on their economic recoveries.
Domestically, the performance of the Singapore economy in the 1Q 2021 was stronger than expected. While the recent tightening of domestic restrictions and border controls represents a setback to segments of the economy, the broader economy should still see a recovery this year in tandem with the global economic rebound and further progress in the domestic vaccination programme.
Against this backdrop, the pace of recovery of the various sectors of the economy this year is likely to be more uneven than earlier expected. First, outward-oriented sectors, including trade-related services sectors (e.g., wholesale trade), are projected to benefit from the pickup in external demand. In particular, the manufacturing sector is expected to expand more strongly than earlier projected due to robust semiconductor demand from the 5G and automotive markets. At the same time, growth in the finance and insurance and information and communications sectors is likely to remain strong, supported in part by further improvements in domestic and foreign credit demand, as well as healthy demand for digital solutions and games and software publishing activities, respectively.
The construction and marine & offshore engineering sectors are projected to see some recovery from the low base last year. However, recent border restrictions on the entry of foreign workers from South Asia will exacerbate ongoing severe labour shortages at construction worksites and shipyards. The manpower crunch, along with the requirement to comply with safe management measures, will significantly impede the recovery of these sectors. Their output is thus projected to be substantially below pre-COVID levels even by year-end.
– Construction+ Online