According to the latest report by the Monetary Authority of Singapore (MAS), the recent tightening of domestic restrictions and border controls will cause a near-term setback to segments that make up about 8% of the economy. Industries that are expected to be affected include the consumer-facing industries, travel-related industries, as well as construction and marine and offshore engineering activity.
But the economic impact of the current restrictions will be significantly less severe than during the lockdown in 2020, with the majority of businesses still remaining in operation currently. The broader economy is expected to see a recovery in the second half of 2021 alongside strengthening global demand and further progress in the country’s vaccination program.
- Trade-related activities such as manufacturing and wholesale trade will be supported by resilient global trade flows and a robust upswing in the global tech cycle.
- Modern services, particularly the financial and ICT sectors, are set to expand at a firm pace this year, amid a pickup in credit intermediation activities and the ongoing digitalization of business processes which has been accelerated by the pandemic.
- Moreover, compared to a year ago, Singapore is much better equipped to handle the pandemic, with more effective testing and tracing, swift isolation of infected cases, and vaccination.
MAS also highlighted the following positive forecasts for the country:
- Singapore’s GDP growth could exceed the upper end of the 4 to 6% forecast range, barring a setback to the global economy.
- The resident unemployment rate should continue to gradually decline.
- Core inflation should continue on its gradual recovery path, with the 2021 forecast unchanged at 0 to 1%.
(Source: Monetary Authority of Singapore)
