Singapore: MAS survey upgrades 2021 GDP growth to 5.8 per cent
In the latest MAS Survey of Professional Forecasters, the median Gross Domestic Product (GDP) outlook for 2021 rose to +5.8 per cent from a previous forecast of +5.5 per cent, with a stronger recovery expected for manufacturing, finance and insurance, and non-oil domestic exports.
However, economic recovery is likely to remain uneven for 2021. The construction, accommodation and food services clusters are expected to contract in the first quarter of 2021.
Inflation risks are expected to remain benign in 2021. The median estimate for headline inflation rose to 0.9 per cent in 2021, up from the previous survey result at 0.6 per cent.
The latest MAS Survey of Professional Forecasters released in March 2021 suggests market-watchers’ continued confidence in Singapore’s recovery momentum. According to the latest report, respondents upgraded their median GDP outlook for 2021 to +5.8 per cent, up from a previous forecast of +5.5 per cent. Growth is also expected to persist in 2022 at +3.8 per cent.
Across sectors, a strong recovery is expected for manufacturing, finance and insurance, and non-oil domestic exports (NODX). The median outlook for Singapore’s manufacturing momentum has been shaded higher to 4.7 per cent in 2021, from December’s outlook of 4.5 per cent. Similarly, finance and insurance is now expected to grow 5.8 per cent in 2021 (up from December’s outlook of 5.1 per cent) while NODX saw a significant upgrade to expand 6.9 per cent for the year ahead (from December’s outlook of 4.0 per cent).
The survey results are in line with our expectations. Our forecast pencils Singapore’s GDP growth at +5.0 per cent and +3.5 per cent for 2021 and 2022 respectively. Growth is expected to be led by manufacturing at +3.0 per cent, services at +3.8 per cent and construction at +41.8 per cent in 2021. This compares to 2020’s performance where the services and construction clusters contracted 6.9 per cent and 35.9 per cent respectively, while manufacturing grew 7.3 per cent.
Note that our construction forecast (+41.8 per cent in 2021) is significantly higher compared to the MAS professional forecaster survey (+22.5 per cent in 2021). This difference may be due to our expectations for construction activities to accelerate on pent-up demand from the slowdown seen in 2020 (-35.9 per cent in 2020). This is also coupled with our view for a relatively controlled COVID-19 situation, which suggests a sustainable return of labour supply to this labour-intensive industry in the months ahead. Overall, the positive growth outlook for Singapore is underpinned by the projected pickup in external demand, coupled with Singapore’s relatively well-controlled COVID-19 situation.
Important notes and disclaimers
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Barnabas Gan joined the UOB Global Economics and Markets Research team in 2019 and is responsible for providing macroeconomic research focusing on Singapore and India. He provides regular economic commentaries through local and international print and broadcast media
Before joining UOB, he was an economist in a financial institution covering Thailand, Korea and Commodities. He also held research positions in the Prime Minister’s Office of Singapore where he performed risk assessments and horizon scanning roles in relation to policy-making.
Barnabas graduated with a Bachelor of Social Science (Honours) in Economics from the National University of Singapore and also holds a Master of Social Science in Applied Economics from the Singapore Management University.
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