The economy is tipped to grow by 2.7 per cent this year despite uneven performances from different sectors, according to a report yesterday.
The forecast means expansion would exceed the 2 per cent growth last year and trump the 2.5 per cent estimate for this year by private sector economists in a recent survey by the Monetary Authority of Singapore.
The better showing will largely be driven by resilient domestic demand and the ongoing recovery in global trade, noted the Institute of Chartered Accountants in England and Wales, which commissioned the report. "We are confident that an improved external environment will help sustain Singapore's growth - despite the drag from domestic factors," noted Mr Mark Billington, its director for South-east Asia.
It noted that growth will be uneven across industries. Sectors like financial services that depend on a stronger global economy can expect a brighter outlook. "A modest recovery in business investment may soon be under way, as business loans rose to 8.1 per cent year on year in the first quarter, the strongest growth in loans since 2014," the report noted.
Oxford Economics, which produced the report, said manufacturers should see some upside as well.
"Due to export orders picking up, Singapore's PMI (purchasing managers' index) is holding up quite well," noted Ms Priyanka Kishore, lead economist at Oxford Economics.
The PMI - an indicator of manufacturing activity - posted its ninth straight month of expansion last month, albeit at a slower pace. Last month's PMI reading came in at 50.8, down from 51.1 in April.
But sectors more dependent on domestic factors will need more time to get back on track given concerns over unemployment, the softer property market and subdued growth in household spending.
"I am cautiously optimistic about the outlook. There are still some key risks such as protectionism, an unexpected slowdown in China's growth or export demand, which will have a knock-on impact on the factory supply chain that exists across Asia," Ms Kishore said.
Long-term prospects for what she dubs the Asean-Five - Singapore, Malaysia, Indonesia, Thailand and the Philippines - remain bright. She noted that by 2030, Asean-Five will be home to 530 million people with a combined gross domestic product of US$5.1 trillion (S$7.1 trillion), making it one of the world's most dynamic consumer and labour markets.
"A big part of this will be driven by foreign direct investments; with the One Belt, One Road initiative, investment inflows to the region could triple to about US$260 billion by 2030," Ms Kishore added.