Singapore’s growth could surpass Govt's 4% to 6% forecasts: Analysts

They say economy could expand by 6.5% this year, beyond estimated 4% to 6% range

Singapore's economic growth could surpass the Government's forecasts, despite the latest round of tighter Covid-19 restrictions.

The Republic's gross domestic product (GDP) may expand by 6.5 per cent this year, taking it beyond the Government's estimated 4 per cent to 6 per cent range, according to the latest quarterly survey of private sector analysts released by the Monetary Authority of Singapore (MAS) yesterday.

In March, the analysts had estimated a yearly growth of 5.8 per cent.

The revision comes after the economy grew by 1.3 per cent in the first quarter, when survey respondents had forecast a 1.1 per cent contraction.

Analysts said that the Covid-19 restrictions rolled out in Singapore in recent weeks are not expected to weigh too heavily on the overall recovery picture.

CIMB Private Banking economist Song Seng Wun pointed to the momentum seen from the stronger-than-expected performance in the first quarter and noted that most sectors in Singapore have still been able to operate despite the tighter measures under the heightened alert phase. It is largely the consumer-facing sectors such as retail and food and beverage that have been hit, he added.

OCBC Bank head of treasury research and strategy Selena Ling highlighted that the low base seen last year in addition to the expectation that tighter measures will be gradually lifted also contributed to the view that any adverse performance during this period is only a "temporary speed bump to growth recovery".

"Moreover, the vaccination pace has been stepped up, and vaccine supply is expected to resolve in the coming period," she said.

Analysts also expect the economy to grow 15 per cent year on year in the second quarter, benefiting from the low base due to Singapore's worst quarter on record a year ago when GDP plunged 13.2 per cent amid the circuit breaker.

The respondents were also concerned about geopolitical risks, including those stemming from US-China tensions, and a slower-than-expected labour market recovery, which could weigh on private consumption.


Maybank Kim Eng senior economist Chua Hak Bin said that Singapore is dependent on external demand, and the stronger manufacturing and export outlook is cushioning the impact of weaker domestic spending from the tighter Covid-19 restrictions here.

Continued strength in manufacturing and professional services will help offset the sectors worst hit by the heightened restrictions, such as food and beverage, retail, construction and hospitality.

The survey was sent out on May 25. It reflects the views of 24 respondents and not MAS' own forecasts.