SINGAPORE - Singapore's economy has almost recovered the output lost during the first half of 2020, although its growth momentum eased in the first quarter of this year.
But while the outlook for Singapore's economy has improved, projected growth outcomes across sectors have become even more lopsided than previously predicted, the Monetary Authority of Singapore (MAS) noted in its biannual macroeconomic review released on Wednesday (April 28).
Prospects for sectors less affected by the pandemic, such as manufacturing, have brightened, but those for sectors worst-hit, like air transport and accommodation, have deteriorated somewhat amid the global rise in Covid-19 cases and the emergence of more contagious virus strains, which have diminished hopes of a substantial reopening of international borders in the near term.
MAS said that Singapore's economic growth is likely to top 6 per cent this year, exceeding the upper end of the 4 per cent to 6 per cent official growth forecast, barring a significant setback in activity from a weaker recovery of the global economy or a surge in locally transmitted cases.
But this robust estimate comes despite the continued unevenness in economic recovery and higher uncertainty, it cautioned.
Looking at the trends in early 2021, the trade-related industry's continued upward trend was supported by the resilient manufacturing sector - industrial production expanded 8 per cent quarter on quarter in the January to March period on a seasonally adjusted basis - but the modern services sectors saw slower expansion in the early months of the year.
The travel-related sector has shown few indications of a revival so far, with the air transport segment remaining muted and hotel occupancy in Singapore falling after the year-end surge in demand, MAS said.
However, the water transportation segment saw a similar expansion to the manufacturing sector, with the volume of total sea cargo handled at Singapore's ports rising 3.2 per cent, on a quarter-on-quarter seasonally adjusted basis.
Strong growth prospects amid uncertainty
Singapore's growth for the year is likely to be robust, MAS said, with external demand picking up and business sentiment among firms in the Republic turning positive in the first quarter of 2021.
But while there is upside for expansion from the likes of a stronger-than-anticipated upturn in the global electronics cycle, downside risks such as Covid-19 virus mutation and vaccination efficacy remain, it noted.
The momentum for some modern services segments could moderate in the coming quarters, such as fund management and insurance. Others related to digitalisation, such as payments and IT and information services, should see steady growth.
The travel-related sector is likely to see weaker recovery than expected, with few positive signs for international business and leisure travel, and domestic tourism unable to give much of a boost to the accommodation and arts, entertainment and recreation industries.