Singapore’s economy is expected to grow about 7% in 2021, at the top of the official forecast range, and will expand at a slower pace next year as an uneven recovery continues across sectors, the government said on Wednesday.
Gross domestic product (GDP) grew 7.1% year-on-year in the third quarter, the Ministry of Trade and Industry (MTI) said, higher than the 6.5% growth seen in the government’s advance estimate.
Analysts had expected a 6.5% increase, according to a Reuters poll.
The economy is expected to grow 3% to 5% next year. The MTI had previously forecast a GDP growth range of 6% to 7% for 2021.
“The recovery of the various sectors of the economy is expected to remain uneven in 2022,” said Gabriel Lim, permanent secretary for trade and industry. He expects outward-oriented sectors such as manufacturing and wholesale trade to remain strong, while activity in aviation- and tourism-related sectors would remain below pre-COVID levels throughout 2022.
On a quarter-on-quarter seasonally-adjusted basis, the economy expanded 1.3% in the third quarter.The small and open economy, which has fully vaccinated about 85% of its 5.45 million population, eased some COVID-19 safety measures this week and has opened quarantine-free travel lanes with several countries.
The MTI said protracted supply disruptions alongside a stronger pickup in demand, as well as rising energy commodity prices, could lead to more persistent inflation.
External inflationary pressures are likely to remain elevated, while wage growth is expected to strengthen as the domestic labour market continues to recover.
Around the world, policymakers have turned their attention to inflationary risks from supply constraints and a recovery in the global economy.
Singapore’s central bank had tightened its monetary policy in a surprise move at its last meeting in October.
Data this week showed Singapore’s key price gauge rose by the fastest pace in nearly three years in October, mainly driven by higher services and food inflation.
The Monetary Authority of Singapore (MAS) will carefully watch inflation dynamics and stay vigilant on price developments when it decides its next policy move, expected in April, Edward Robinson, MAS deputy managing director, told a media briefing.
Singapore kept its forecast for headline inflation to come in at about 2% this year, and average 1.5-2.5% in 2022.