Singapore's economy will grow by 5.5 per cent next year, putting an end to the nation's worst recession ever, according to a central bank survey of professional forecasters.
The pace of growth can be even higher if successful vaccine deployment worldwide can effectively contain the Covid-19 pandemic, they said.
In the quarterly survey by the Monetary Authority of Singapore (MAS), 23 economists and analysts predicted growth of 5 per cent to 5.9 per cent.
The forecast comes after the Ministry of Trade and Industry (MTI) last month said growth will rebound between 4 per cent and 6 per cent next year - the most since 2011, when the economy grew 6.3 per cent.
This, however, is coming off a particularly low base as MTI expects the economy to shrink 6 per cent to 6.5 per cent this year.
Recent developments have made economists more confident that a recovery is under way. Almost four in five of them felt that the top reason lifting the growth outlook in the coming year would be the containment of the pandemic, mainly because vaccines would be made available across the globe.
Commenting on the MAS survey, analysts said other factors that could impact Singapore's growth trajectory next year would include the upswing of the electronics cycle and the pace of recovery in other regional economies such as Malaysia, Indonesia and China.
But the recovery will depend heavily on containing Covid-19, both globally and domestically, analysts said.
DBS Bank senior economist Irvin Seah said the emergence of several vaccine candidates and projections of higher-than-expected production capacity of these vaccines have added optimism that the timeline for ending the pandemic can be brought forward.
"The more clarity we get on vaccination, the stronger the optimism would be," he said.
However, a certain degree of caution is required, given the vaccination process in countries with larger populations and meagre resources. India, for example, would be a logistical challenge and would require more time than elsewhere.
In the MAS survey, the prospect of reopening borders to international travel was also seen as a potential upside.
But Mr Seah said travel restrictions will be among the last of the curbs to be lifted, and may not contribute much to next year's economic growth.
On the flip side, around seven in 10 respondents in the MAS survey felt that the biggest risk to growth was that the Covid-19 situation might deteriorate further.
Around a quarter of the respondents saw worsening United States-China tensions as a downside risk, compared with 60 per cent in the previous survey.
OCBC Bank economist Howie Lee said he will stick with his 2021 growth estimate of 5 per cent, which is at the lower end of the scale in the survey.
"We remain cautious of downside risks to both the global and Singapore economy until the vaccine proves itself heavily effective after public dissemination," he said.
For this year, forecasters in the MAS survey expect gross domestic product to decline by 6 per cent, unchanged from the previous survey.
They also expect the unemployment rate to reach 3.7 per cent at the end of this year, up from their previous estimate of 3.5 per cent.
Three-quarters of the respondents expect private residential property prices to pick up in the October-to-December period compared with the previous quarter, while the rest believe prices will remain stable.