Singapore maintained its forecast this year for the economy to gradually grow out of its worst recession, and signalled continued support for the unemployed and vulnerable sections of the population.
The economy will grow by 4.0 to 6.0 per cent this year, the Ministry of Trade and Industry (MTI) said yesterday, sticking to its forecast from last November, after weighing positive and negative developments in key external economies.
The higher end of the 2021 estimate would make it the best year since 2011, when gross domestic product grew by 6.3 per cent.
However, the growth acceleration this year can be partially attributed to the low base set in the second quarter of last year when the economy shrank by 13.3 per cent - the worst in a quarter ever.
The ministry raised its final estimate for coronavirus-hit 2020, stating that the economy shrank by 5.4 per cent, making it Singapore's worst-ever recession since independence.
Still, this figure is an improvement on the flash estimate of 5.8 per cent given last month as well as the 6.25 per cent mid-point of the 6.5 to 6.0 per cent range given last November. The economy grew by 1.3 per cent in 2019.
MTI said that since the last Economic Survey of Singapore in November last year, there has been further progress in Covid-19 vaccine development and deployment, with several approved vaccines being rolled out in many economies around the world.
"Although the speed of vaccine deployment varies, advanced economies like the United States and the euro zone are likely to reach population immunity by the second half of this year, which should in turn spur their economic recoveries," it said in yesterday's press statement.
Growth prospects for regional economies such as Malaysia and Indonesia have, however, weakened with the recent resurgence in infections.
And economic risks remain, with significant uncertainty surrounding the course of the Covid-19 pandemic and the trajectory of the global recovery, MTI said.
While the Covid-19 situation remains under control in Singapore and the vaccination programme is under way, the pace of border re-opening slowed amid the global surge in cases and the emergence of more contagious strains of the virus.
"Against this external and domestic backdrop, the Singapore economy is expected to see a gradual recovery over the course of the year, although the outlook remains uneven across sectors."
MTI said the outward-oriented sectors - including trade-related services sectors such as wholesale trade and water transport - are projected to benefit from the pickup in external demand.
However, Enterprise Singapore kept its forecast for non-oil domestic exports at between 0 per cent and 2 per cent expansion, citing continued risks and uncertainties in the global economy.
At a virtual briefing yesterday, Permanent Secretary for Trade and Industry Gabriel Lim said the pace of Singapore's recovery is expected to remain uneven across sectors.
Mr Lim said the bulk of economic growth this year will come from trade and manufacturing, as the pace of recovery in domestic-oriented sectors will be more gradual amid relatively subdued domestic private consumption.
Labour market developments will remain a major drag for domestic consumption, he said.
Mr Kenny Tan, a director at the Ministry of Manpower, said that while resident employment has shown growth in recent months, bringing down the unemployment rate, the outlook remains uncertain. "Some employers will still be hesitant about adding manpower to their cost until they are more certain about the future of their businesses," he said.
Mr Tan said substantial government support will still be needed to maintain the hiring momentum from last year. "In the Budget tomorrow, you will see what measures we are prepared to introduce this year to give hiring a boost," he said.
Mr Edward Robinson, deputy managing director of the economic policy group at the Monetary Authority of Singapore (MAS), said the central bank's policy stance remains unchanged and appropriate. MAS expects an uptick in inflation this year.