Singapore's economy has been gaining strength and is almost back to pre-pandemic levels, even if growth momentum has eased in recent months.
But while the overall economic picture looks rosier, growth across sectors could be even more lopsided than previously forecast, the Monetary Authority of Singapore (MAS) said in its biannual macroeconomic review released yesterday.
The prospects for sectors less affected by the Covid-19 virus have become brighter, and the prognosis for the worst-hit industries has become more grim amid the global surge in cases and diminished hopes of widespread opening of international borders.
At the same time, labour market conditions have continued to improve, with total employment growing in the first quarter.
The central bank said that Singapore's economic growth is likely to top 6 per cent this year, surpassing 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 Covid-19 cases.
But it cautioned that this robust estimate belies the continued unevenness in economic recovery and higher uncertainty.
While there is upside for expansion from the likes of a strong upturn in the global electronics cycle, downside risks such as coronavirus mutations and vaccination efficacy remain.
Singapore's economic growth momentum across most sectors, except for the trade-related sector that was bolstered by the resilient manufacturing industry, eased in the first quarter of this year compared with the fourth quarter of last year, which also saw slowed sequential growth from the previous quarter.
Real gross domestic product reached 99.6 per cent of its pre-Covid-19 level by the first quarter of this year, and the economy as a whole had almost recouped the output lost in the first half of last year.
Global growth could also pick up speed from the second quarter.
The healthier economy has rubbed off on the labour market, with total employment growing in the first three months of the year, for the first time since the start of the pandemic.
This was driven by the service sector's hiring of residents. Meanwhile, non-resident employment contracted across all sectors.
Manpower Minister Josephine Teo said during a visit to NTUC LearningHub yesterday that this is a "significant turn" in the labour market's recovery.
"It suggests that the confidence amongst employers is returning, is continuing to build up," she said.
Unemployment rate, which peaked at 3.5 per cent overall last September, eased to 2.9 per cent last month, continuing a downward trend from January's 3.2 per cent.
For residents, the rate fell from 4.3 per cent in January to 4 per cent last month. It declined from 4.5 per cent to 4.2 per cent in the same period for Singaporeans.
UOB economist Barnabas Gan said that the unemployment rate could fall further to 2.6 per cent in the fourth quarter of this year, which would be a sizeable improvement from last year.
The service sector is likely to see higher labour demand in the quarters ahead, given the improved domestic economic environment, he said, but the construction sector could continue to face labour supply restrictions, owing to Covid-19 risks across parts of Asia.