Singapore economy to grow by 5.5 per cent next year: MAS survey
Singapore's economy will grow by 5.5 per cent next year, putting an end to the nation's worst recession, according to a central bank survey of professional forecasters.
The pace of growth can be even higher if successful vaccine deployment worldwide can effectively contain the Covid-19 pandemic, they said.
In the quarterly survey by the Monetary Authority of Singapore (MAS), 23 economists and analysts predicted a growth of 5 per cent to 5.9 per cent.
The forecast comes after the Ministry of Trade and Industry (MTI) said last month growth will rebound between 4 per cent and 6 per cent next year - the most since 2011 when the economy grew 6.3 per cent.
This, however, is coming off a particularly low base as MTI expects the economy to shrink 6 per cent to 6.5 per cent this year.
Recent developments have made economists more confident a recovery is under way. Almost four in five of them felt the top reason lifting the growth outlook would be the containment of the pandemic, mainly because vaccines would be made available across the globe.
Commenting on the MAS survey, analysts said other factors that could impact Singapore's growth trajectory next year would include the upswing of the electronics cycle and the pace of recovery in other regional economies such as Malaysia, Indonesia and China.
But the recovery will depend heavily on containing Covid-19, both globally and domestically, analysts said.
DBS Bank senior economist Irvin Seah said the emergence of several vaccine candidates and projections of higher-than-expected production capacity of these vaccines have added optimism that the timeline for ending the pandemic can be brought forward. "The more clarity we get on vaccination, the stronger the optimism would be," he said.
In the survey, the prospect of reopening borders to international travel was also seen as a potential upside. But Mr Seah said travel restrictions will be among the last of the curbs lifted, and may not contribute much to next year's growth.
On the flip side, around seven in 10 respondents in the MAS survey felt the biggest risk to growth was that the Covid-19 situation might deteriorate.
OCBC Bank economist Howie Lee said he will stick with his 2021 growth estimate of 5 per cent, which is at the lower end of the scale in the survey.
For this year, forecasters expect the unemployment rate to reach 3.7 per cent at the end of the year, up from their previous estimate of 3.5 per cent.
Three-quarters of the respondents expect private residential property prices to pick up in the October-to-December period.