The government did not maintain this year’s GDP forecast, but warned that due to COVID, the uncertainty will be greater than usual.
Singapore’s economic growth in the first quarter exceeded initial expectations. The government maintained its forecast for this year’s economic growth, but was cautious about economic recovery due to the uncertainty of the COVID-19 pandemic.
The Ministry of Trade and Industry (MTI) said on Tuesday that gross domestic product (GDP) in the first quarter increased by 1.3% year-on-year, higher than the government’s previous estimate of 0.2%.
Manufacturing, finance, insurance and wholesale trade supported the expansion in the quarter. According to a Reuters survey, analysts had expected the index to grow by 0.9%.
MTI currently maintains its GDP growth forecast for 2021 at 4% to 6%, but warns that the pandemic and new domestic actions to contain the virus cause uncertainty beyond normal levels. Outlook will be reviewed in August.
The authorities said last month that economic growth may exceed the upper limit of the forecast range and recover from the economic recession triggered by the COVID-19 pandemic in 2020, which is the worst situation on record.
The Permanent Secretary of the Ministry of Trade and Industry Gabriel Lim said that if external demand exceeds expectations, the Singaporean economy may outperform the growth forecast for 2021, but there are also huge downside risks.
He said: “The pace of recovery in various economic sectors may be more uneven than previously expected.”
On a quarterly adjusted quarterly basis, the economy grew by 3.1% in the first quarter.
This city-state is often regarded as a leader in global growth because international trade dwarfs its domestic economy.
The government has injected more than 100 billion Singapore dollars (75.34 billion U.S. dollars) into the economy to deal with the consequences. The central bank maintained a loose monetary policy at its last meeting in April.
Edward Robinson, vice president of the Monetary Authority of Singapore (MAS), said: “The easing of fiscal and monetary policies, supportive impulses continue to flow in the system.”
He said that the policy stance is still appropriate and the HKMA will review the policy in October as planned.
He said the central bank will consider factors that may affect “inflation dynamics and growth factors.”
This month, Singapore imposed some restrictions on social gatherings, the most severe since the lockdown last year, in response to the recent surge in local COVID-19 infections, including bans on meals, restrictions on social gatherings, and urges to return to work at home.
The increase in the number of cases (related to the more virulent and unpredictable virus strain that first surfaced in India) also means that borders are tightened. Famous events such as the annual Shangri-La Dialogue next month and the World Economic Forum in August have been cancelled.
Selena Ling, head of treasury research and strategy at OCBC Bank, said: “We had a lot of prosperity in the first quarter, but it has fallen.”