The economy to grow 6.5 per cent this year, up from the earlier forecast of 5.8 per cent and the second upgrade they have made in six months. This is also higher than the 4 per cent to 6 per cent forecast range that the Ministry of Trade and Industry left unchanged. Singapore saw a spike in local community infections in recent months and tightened restrictions under what authorities called a Phase 2 (Heightened Alert) in order to stem transmissions. This included increasing the cap on social gatherings to two people, banning dining-in at restaurants and returning to work-from-home as the default. Some of these tightened measures were lifted as the number of community cases fell, with the limit on group sizes back up to five people. Economists had previously said the temporary move to tighten curbs would not throw the economic recovery off course. For the year ahead, the manufacturing sector remains a key bright spot in the economy. The sector, which makes up about one-fifth of Singapore’s economy, is expected to grow 8.3 per cent, well above the forecast of 4.7 per cent three months ago. The outlook also brightened for the finance and insurance sector at 6 per cent, a slight upgrade from the 5.8 per cent in the previous survey; as well as for non-oil domestic exports which is seen rising 7.5 per cent this year compared with the last 6.9 per cent estimate.
Battered construction sector remains on track for a recovery this year, although its growth outlook has been trimmed to 19.3 per cent from 22.5 per cent previously. Among the others with a dimmer outlook, growth for the accommodation and food services sector is now at 6.5 per cent, nearly halving from the 11 per cent expected three months ago. Expectations for private consumption is also down to 5.2 per cent from 7.9 per cent, while wholesale and retail trade is seen rising 4.4 per cent, down marginally from the last 4.5 per cent forecast. The labour market is set to improve marginally as economists expect the unemployment rate to reach 2.7 per cent by the end of the year, compared with the earlier expected 2.9 per cent. An escalation of the COVID-19 situation remained the top downside risk to growth, said the economists. This is followed by geopolitical tensions and a slower-than-expected labour market recovery that could weigh on private consumption. As for upside risks, these include a containment of the pandemic, a stronger-than-expected performance from the manufacturing sector and the possibility of borders reopening for international travel. Further ahead in 2022, the Singapore economy is set to expand by 4 per cent.