SINGAPORE - The Singapore economy is likely to stage a slow recovery in the second half of this year, said Deputy Prime Minister Heng Swee Keat on Monday (Jan 11) as he gave his outlook for 2021.
This is in line with the global consensus that the world's economy may recover in the second half of the year as a result of vaccination programmes that have kicked off, giving hope that the pandemic could be better controlled, he added.
"Even then, the world has lost a significant part of its gross domestic product, and even if that scenario pans out, it will still likely be below the 2019 level. So that is the scenario that we have to plan on," said Mr Heng at The Straits Times Global Outlook Forum.
He was responding to a question from the moderator, Straits Times editor Warren Fernandez, on his forecast for the economy this year amid the uncertainty that has roiled markets in the past year.
Mr Heng said the way to deal with uncertainty is to assess what is the most likely, or central, scenario for the economy, and then to look at the potential upsides which may give surprises and the possible downsides to prepare for.
"In the case of the Singapore economy... our central scenario is that we may see that the first half will still not be very good. The second half, we may begin to see some uptick in activities," he said at the annual conference organised by The Straits Times.
Mr Heng, who is also Coordinating Minister for Economic Policies and Finance Minister, said this was due to the vaccination drives going on around the world and the global consensus that the world economy may recover in the second half of the year.
A potential positive factor could be vaccination efforts turning out to be very effective across the world, allowing it to overcome the Covid-19 pandemic, he said.
Possible downsides include tensions between the United States and China escalating - which will have a "dampening effect" on the global economy - and if vaccines do not work as well as expected.
"And of course, there could be some other events that could intervene in the meanwhile, so we have to keep our minds open, and watch for new risks that could emerge," he added.
Mr Fernandez, who is also editor-in-chief of Singapore Press Holdings' English/Malay/ Tamil Media Group, asked whether Mr Heng was more optimistic for the coming year.
On the economy, Mr Heng said: "My central scenario is that this year will be better than last year."
He pointed out how new variants of the virus have emerged, and how new outbreaks have led to a resurgence of infections in places that had done well to control the virus initially.
"It is not something that we can wish away, so I would say we need to take a very realistic approach to this."
Responding to a question on the five Budgets that had to be announced over the past year as the pandemic took its toll on businesses and people, Mr Heng noted that he addressed Parliament nine times over the past year.
He added: "My wish for this year is one Budget."