The projected expansion, however, is slower than this year’s forecast of “around 7%” – a slight upgrade from the previous “6% to 7%” projection, after a 5.4% contraction in 2020.
The recovery of various sectors in 2022 “is expected to remain uneven”, the trade and industry ministry said in its quarterly economic update.
“The growth prospects for outward-oriented sectors remain strong given robust external demand,” but “the recovery of the aviation- and tourism-related sectors is likely to be gradual as global travel demand will take time to recover and travel restrictions could persist in key visitor source markets”.
The ministry also said today that gross domestic product for the three months through September expanded 7.1% on the year, up from the 6.5% rate in the preliminary data released last month.
Manufacturing and a rebound in the services sector supported the growth.
While Singapore’s full vaccination rate hit 80% in late August, the city state has faced a surge of coronavirus cases, setting a daily record of over 5,000 last month.
But the vast majority of infections have been mild or asymptomatic, and the wave appears to have peaked: Monday’s new infections totalled 1,461, the lowest in two months.
Looking ahead, “despite the relative high base data in 2021, Singapore’s economy is expected to stay underpinned by the favourable export and manufacturing sectors”, said Barnabas Gan, an economist at Singapore’s United Overseas Bank, which projects a 3.5% growth rate for 2022.
The country is also progressively extending its “vaccinated travel lane” programme – launched in September to allow fully inoculated visitors to enter without quarantining – to major economies in Europe and North America.
Neighbouring countries are starting to reopen their borders as well – a welcome development for Singapore, which has long positioned itself as a hub for business and leisure travel.
Domestically, starting this Monday, the government eased some of its Covid-19 restrictions, allowing groups of up to five fully vaccinated people to dine at restaurants.
Authorities expect more economic activity to resume globally in 2022.
But the government also noted some downside risks, such as the uncertain Covid-19 situation, China’s economic slowdown and protracted global supply chain disruptions.
It also warned of rising energy commodity prices, leading to inflation.
“This could in turn result in an earlier or larger increase in interest rates than anticipated, thereby triggering a tightening of global financial conditions.”
Singapore’s central bank tightened its policy in October for the first time in three years.