SINGAPORE - Singapore's economy wrapped up 2021 with its fastest growth in more than a decade, putting behind the Republic's worst recession the year before, when the Covid-19 pandemic struck.
The economy grew 7.2 per cent last year, the most since 2010 and higher than earlier estimates, the Ministry of Trade and Industry (MTI) said on Monday (Jan 3).
MTI had predicted in November that gross domestic product (GDP) growth in 2021 would come in at about 7 per cent, the top end of an earlier forecast range of 6 per cent to 7 per cent. The economy had contracted by 5.4 per cent in 2020.
In his New Year address last Friday, Prime Minister Lee Hsien Loong said the economy is expected to grow by 3 per cent to 5 per cent in 2022, reiterating MTI's maiden forecast for the year in November.
For the fourth quarter of 2021, the economy expanded by 5.9 per cent year on year, moderating from the 7.1 per cent growth in the previous quarter, which was fuelled by a low base comparison.
Economists in a Bloomberg poll had forecast fourth-quarter GDP growth at 5.1 per cent year on year and full-year 2021 expansion at 7.1 per cent.
On a quarter-on-quarter seasonally adjusted basis, the economy expanded 2.6 per cent in the October to December quarter, faster than the 1.2 per cent growth in the preceding quarter, MTI said.
Analysts said the quarterly gain shows that economic growth picked up momentum despite the global Omicron variant surge that saw Singapore suspend ticket sales on vaccinated travel lanes (VTLs) till Jan 20.
Ms Selena Ling, chief economist and head of treasury research and strategy at OCBC Bank, said the Republic's 2022 growth outlook will depend on further relaxation of social distancing rules and additional VTLs giving more life to the service sector and helping to ease some of the labour shortages that have marred construction.
She said MTI's 2022 growth forecast reflects less stellar manufacturing growth and would require the service and construction sectors to pick up the slack.
Manufacturing was still the best-performing sector in the final quarter of 2021, with output swelling by 14 per cent year on year, almost double the 7.9 per cent growth in the third quarter.
The sector grew 12.8 per cent through the whole of 2021, up from 7.3 per cent the year before.
MTI said manufacturing growth during the quarter was supported by output expansions in all clusters, in particular, the electronics and precision engineering clusters amid sustained global demand for semiconductors and semiconductor equipment.
The construction sector grew by 2 per cent on a year-on-year basis in the fourth quarter of 2021, but in absolute terms, the value-added of the sector remained 26 per cent below its pre-Covid-19 level as activity at construction worksites continued to be weighed down by labour shortages, MTI said.
The sector still managed full-year growth of 18.7 per cent, a sharp rebound from the 35.9 per cent contraction in 2020.
The service industries expanded by 4.6 per cent in the fourth quarter and 5.2 per cent through last year.
Morgan Stanley's Hong Kong-based economist Derrick Kam said: "Services will likely continue its sequential rebound from a low base, particularly in sub-sectors such as wholesale and retail trade, and accommodation and food services, driven by an overall easing in domestic Covid-19 restrictions as well as a resumption of international tourism."