Singapore's economy grows 7.6% in 2021

Summary

Singapore's economic growth is forecasted to slow to 3-5% in 2022, following a 7.6% expansion last year. Despite uneven sectoral recovery, analysts expect broader and higher-quality growth, particularly in hospitality, retail, and F&B sectors, which were hit hard during the pandemic. Manufacturing, IT, and finance will drive growth, while construction and aviation may take longer to recover. External factors like global supply chain disruptions, rising energy prices, and inflation pose risks, with monetary tightening expected to cool growth as central banks focus on controlling inflation.

Takeaways

• 📉 Singapore's economic growth is forecasted to be between 3-5% this year, slower than last year’s 7.6% growth.
• 🌍 The growth is expected to be more broad-based, indicating a higher quality of recovery across various sectors.
• 🏨 Sectors like hospitality, retail, and food & beverage, which were heavily impacted by COVID-19, are expected to catch up and contribute more to growth.
• 📊 Although headline GDP growth may slow, the recovery will come from sectors that underperformed in the last two years.
• 🏗️ Construction and marine industries are forecasted to recover but may only reach pre-pandemic levels next year or later.
• 👷‍♂️ A loosening of foreign manpower restrictions is needed to meet pent-up demand in the construction sector and to address project delays.
• ✈️ The aviation and tourism sectors are expected to take about two years to fully recover as travel demand gradually returns.
• ⛓️ Global supply bottlenecks are projected to persist throughout the first half of 2022, impacting industrial production and GDP growth.
• 💡 Rising energy prices and geopolitical tensions are fueling global inflationary pressures, which pose risks to economic growth.
• 📈 Inflation will erode consumer purchasing power, and central banks may shift focus to taming inflation, potentially tightening monetary policy and cooling growth.

Q & A

What is Singapore's economic growth forecast for this year?

Singapore's economic growth forecast for this year is between 3 to 5 percent.

How did Singapore's economy perform last year?

Singapore's economy expanded by a better-than-expected 7.6 percent last year.

What is expected regarding the pace and quality of economic growth in Singapore?

The pace of growth is expected to slow down but become more broad-based, meaning a wider recovery across sectors, leading to improved quality of growth in 2022.

Which sectors were deeply impacted by COVID-19, and what is their expected recovery pattern?

The hospitality, retail, and food & beverage sectors were deeply impacted by COVID-19 and are expected to play catch-up, contributing to future growth.

What sectors are expected to drive Singapore's growth this year?

The manufacturing, information and communications, and finance sectors are expected to drive growth this year.

When is the construction sector expected to fully recover?

The construction sector is expected to return to pre-pandemic levels by next year or later, depending on foreign manpower inflows and delays in ongoing projects.

What is the outlook for the aviation and tourism industries?

The aviation and tourism industries are expected to fully recover in about two years, as travel demand slowly revives.

What external pressures are affecting Singapore's economy in the near term?

Global supply bottlenecks, rising energy prices, and geopolitical tensions are expected to constrain industrial production and GDP growth in the near term.

What is the biggest economic risk for Singapore this year?

Inflation is considered the biggest risk, as it can erode consumer purchasing power and negatively impact economic growth.

How are central banks expected to respond to rising inflation?

Central banks are likely to shift their focus towards controlling inflation by tightening monetary policy, which could have a cooling effect on economic growth.