S'pore Q4 GDP growth expected to moderate amid Omicron: Poll

Singapore's economic growth is expected to have moderated in the fourth quarter, partly hurt by uncertainty caused by the Covid-19 Omicron variant.

Analysts say the outlook for next year will hinge on the global progress made against the pandemic.

Gross domestic product (GDP) is seen expanding 5.4 per cent from the same period a year earlier, according to the median forecast of economists in a Reuters poll, marking the fourth straight quarter of growth. The economy grew 7.1 per cent in the third quarter.

"The drop in year-on-year growth rates would be largely due to unfavourable base effects," said Mr Brian Tan, regional economist at Barclays in a report, noting the year-ago sharp rebound from the pandemic-led downturn.

He sees overall growth for this year at 6.8 per cent.

Singapore's economy is likely to grow around 7 per cent this year, and between 3 per cent and 5 per cent next year, according to official forecasts.

Growth in the city state has been picking up this year from the damage caused by virus-related restrictions and the sluggish global economy, as countries around the world shifted their strategies to living with the coronavirus.

However, the tourism hub has suspended the sale of tickets for arriving flights and buses under its quarantine-free vaccinated travel lane programme last week as the Omicron variant spreads.

Singapore has vaccinated 87 per cent of its population, while 39 per cent of the population have received their Covid-19 booster shot.

Ms Selena Ling, OCBC Bank's head of treasury research and strategy, said: "Assuming that Omicron blows over by early 2022, then a step-up in services momentum should materialise.

"Ditto for construction, where border relaxation may allow for more foreign workers to return."

She is expecting 3 per cent to 5 per cent growth next year, in line with the official forecast.

The Monetary Authority of Singapore (MAS) unexpectedly tightened its monetary policy at its last meeting in October amid mounting inflationary pressures caused by supply constraints and a recovery in the global economy.

Economists widely expect MAS to tighten again in April next year as price pressures persist.

REUTERS