SINGAPORE (THE BUSINESS TIMES) - UOB expects the upcoming Singapore Budget 2021 to stay "expansionary but calibrated" to target specific industries and parts of society still affected by Covid-19.

The research team is pencilling Budget 2021 to see an overall deficit of $12.5 billion or 2.5 per cent of nominal gross domestic product. For financial year 2020, Singapore's fiscal deficit is pencilled at $74.2 billion after allocating almost $100 billion to combat the pandemic.

In the upcoming fiscal year, UOB projects operating revenue to grow to $70 billion from $63.7 billion a year ago, and total expenditure to fall to $80 billion from $102.1 billion in financial year 2020.

UOB is keeping to its call for the Singapore economy to expand by 5 per cent in 2021, against the Ministry of Trade and Industry's forecast of between 4 per cent and 6 per cent. The research team recognises that the global backdrop will likely be favourable for the Republic's economy for the year ahead.

UOB economist Barnabas Gan said economic data in the second half of 2020 suggests that Singapore's economy has been recovering since the trough in the second quarter of 2020.

Coupled with the fact that Budget 2021 will be the first Budget for the new term of government for the next five years, policymakers will likely be conservative in their fiscal planning, he noted.

Mr Gan said the upcoming Budget could revisit medium- to long-term measures to develop Singapore's advanced manufacturing capabilities and digital connectivity, and accelerate the Republic's industry transformation.

He anticipates five key thrusts that the Budget could introduce. They are job creation and preservation; provision of liquidity for businesses; reinforced social safety nets; extended aid for the tourism sector; and promoting Singapore to be a global-Asia node of technology, innovation and enterprise.