By Ronnie Harui
SINGAPORE – Singapore’s economy is likely to grow faster this year than previously expected, as faster growth in manufacturing, domestic non-oil exports, and finance and insurance outweighs slower growth in areas such as personal consumption, a central bank poll on Monday found.
Gross domestic product is expected to grow 6.5% in 2021, according to the median projection of external professional forecasters in the June survey by the Monetary Authority of Singapore. This compares with the March poll’s forecast for 5.8% expansion.
Economists raised their manufacturing growth forecast for 2021 from 4.7% to 8.3% and their forecast for financial and insurance expansion from 5.8% to 6.0%. Domestic exports excluding oil are expected to increase 7.5% in 2021, up from 6.9% previously forecast.
The median forecast for growth in private consumption has been lowered from 7.9% to 5.2%, while that for construction expansion has been lowered from 22.5% to 19.3%. The economists also reduced their growth estimates for wholesalers and retailers from 4.5% to 4.4% and for hotels and restaurants from 11.0% to 6.5%.
The MAS said Monday that 24 economists and analysts responded to the latest quarterly survey, the results of which do not reflect the central bank’s views or projections.
A further deterioration in the Covid-19 situation and the associated renewed tightening of public health measures were the most frequently cited downside risk to Singapore’s growth prospects, according to respondents. In addition, respondents expressed concern about geopolitical risks, including those arising from tensions between the US and China.
Effective pandemic containment again emerged as the most cited upside risk to Singapore’s growth prospects. Respondents also cited higher-than-expected manufacturing performance as an upside risk, driven in part by robust global demand for electronics.
Singapore’s consumer price index is expected to rise 1.4% this year, compared to the 0.9% previously forecast. Core CPI is likely to rise 0.8% this year, compared to the 0.7% increase predicted in the previous survey.
The US dollar-Singapore dollar exchange rate is projected at 1.3130 by the end of 2021, up from 1.3000 forecast in the March poll.
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