The government did not maintain its GDP forecast for the year, but warned of a greater degree of uncertainty than usual due to COVID.
Singapore’s economy has expanded more than expected during the first quarter and the government maintained its growth forecast for the year, but took a cautious note on the recovery due to the uncertainties of the COVID-19 pandemic.
Gross domestic product (GDP) grew 1.3% year-on-year in the first quarter, the Ministry of Trade and Industry (MTI) said on Tuesday, higher than the 0.2% growth forecast in the government’s advance estimate .
Manufacturing, finance and insurance and wholesale trade supported expansion during the quarter. Analysts had expected a 0.9 percent increase, according to a Reuters poll.
MTI maintained its GDP growth forecast for 2021 of 4% to 6% for now, but warned of a greater degree of uncertainty than usual caused by the pandemic, as well as new domestic limits against the virus. Prospects will be reviewed in August.
Authorities had said last month that growth could exceed the upper end of the forecast range, recovering from the recession induced by the COVID-19 pandemic in 2020, the worst on record.
An uneven recovery
While Singapore’s economy may exceed growth forecasts for 2021 if external demand exceeds expectations, there are also significant downside risks, said Gabriel Lim, the permanent secretary for trade and industry.
“The pace of recovery in various sectors of the economy is likely to be more uneven than expected before,” he said.
Year-on-year, seasonally adjusted, the economy expanded 3.1 percent in the first quarter.
The city-state is often seen as a key factor for global growth, as international trade pushes its national economy.
The government has invested more than Singapore $ 100 billion ($ 75.34 million) in the economy to deal with the consequences. The central bank maintained its accommodative monetary policy at its last April meeting.
“The accommodative and supportive momentum of fiscal and monetary policy continues to flow through the system,” said Edward Robinson, deputy director general of the Singapore Monetary Authority (MAS).
He said the political stance was still appropriate and the MAS would review the policy in October, as planned.
The central bank will consider factors that may affect “inflation dynamics as well as growth considerations,” he said.
Singapore this month has imposed some restrictions on social gatherings, the most difficult since it came out of closure last year, to combat a recent rise in local COVID-19 infections, including a ban on eating, limiting social gatherings and urge a return to work from home. .
The increase in cases, related to a more virulent and unpredictable strain of the virus that first appeared in India, has also led to a tightening of borders. Prestigious events such as the annual Shangri-La Dialogue, scheduled for next month and the World Economic Forum in August, were canceled.
“A lot of the exuberance we had in the first quarter, it’s kind of a bit of a setback,” said Selena Ling, head of treasury research and strategy at OCBC Bank.