Singapore’s economic growth in 2021 could exceed forecasts by 4% to 6% (Central Bank Chief)

Singapore: Barring a recession in the global economy, Singapore’s economic growth could exceed the “upper limit” of this year’s official forecast, Ravimenon, managing director of the Monetary Authority of Singapore (MAS) said on Wednesday. (June 30th). ..

Menon told a virtual press conference upon the release of the MAS annual report that the economy as a whole is expected to recover in the second half of this year due to increased global demand and progress in the economy. Singapore immunization program. It was.

“This year is a virus-vaccine battle. The sooner people are vaccinated, the sooner they will get back to normal, ”Menon said.

“But if the virus continues to mutate at a faster rate and there are new mutants that are more infectious and possibly vaccine resistant, the economic situation will worsen,” he added.

Read: COVID-19 task force shares wide array of new regular plans with potential for home and travel recovery

Withdrawal from certain industries

Singapore’s official forecast Held at 4-6% Last month we envisioned “growing uncertainty” in stepping up measures to accompany rising COVID-19 infections in the region. The forecast will be revised in August.

Menon gave an assessment of Singapore’s economy this year, saying that in the first quarter of 2021, the country’s economy recovered from the full production loss that occurred during the COVID-19 pandemic.

“The recent tightening of domestic regulations and border controls will lead to a short-term recession in segments that make up about eight percent of the economy,” he said.

These include retail, restaurant and ground transportation services. Travel-related industries such as air travel, accommodation, entertainment and recreation are also expected to be further delayed in the recovery, he said.

He added that the marine and offshore construction and engineering sectors could be hampered by labor shortages.

Despite the recession in some industries, he said, the economic impact of the current regulations would be “significantly relaxed” compared to last year’s “circuit breaker”.

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“We can resist small epidemics. “

In response to a question from a reporter on the impact of vaccination on Singapore’s growth, Menon said that if 70-80% of residents are vaccinated, Singapore will have “more room to revive the economy.” There is. “

Menon said, referring to the authorities’ previous announcement that Singapore may need to lead a new, normal life in which COVID-19 is rampant. I want to achieve it by the end of this year. “

Mondial economy

His reputation for the global economy was positive, but he also said there was “a significant downside risk”.

He said the global economy has likely already returned to pre-pandemic production and is expected to grow 5.8% in 2021 after contracting 3% last year.

“In fact, the global economy can be surprisingly on the rise,” he said.

The main downside risk is the emergence of more infectious or fatal viral mutations, but there is also the risk of a sharp rise in inflation in the United States.

Menon said the rapid pace of economic recovery in the United States could lead to “clear and sustained price increases.”

Signs of too high inflation can drive up interest rates. He warned that “premature tightening of fiscal conditions” could lead to increased volatility in financial markets.

“In short, the global economy is in a much better position than last year, but uncertainty remains high,” he said.

Read: The US economy grew 6.4% in the first quarter which is probably just the start

In Singapore Core inflation The 2021 forecast remains unchanged at 0 to 1% and should continue on a path of gradual recovery. The MAS revised its CPI-All Items inflation forecast from 0.5 to 1.5% to 1 to 2% due to the sharp rise in the COE premium in the second quarter.

Menon said core inflation has fallen from low levels while MAS closely monitors global and domestic price movements.

“The MAS will pay attention to signs of accelerating or sustaining inflation,” he said.

A “resilient” real estate market

He further warned that the real estate market would remain “considerably resilient” in the face of a pandemic and recession.

Nominal GDP fell 8.2% last year, but the residential property price index rose 1.6%. According to the MAS, in the first quarter of 2021, the index was 5.6% above pre-pandemic levels, even though GDP was about 4% below pre-COVID-19 levels.

“The MAS, along with the MND (Ministry of National Development) and URA (Urban Redevelopment Authority), remain very wary of the risk of sustained price increases relative to income trends,” Menon said.

“The long-term difference between price and income is unsustainable in terms of market stability and undesirable in terms of affordable housing. “

Menon said the market was not currently “overheating” when asked later if any cooling measures were being considered. Please continue to be careful and be careful. We hope the market will remain stable. “

Read: MAS’s net profit down 51% to S $ 5.2 billion

Financial sector performance

Last year, the financial services sector grew 5.1%, despite the overall contraction of the economy. In the first half of 2021, the sector would have experienced growth of around 6%.

Growth has spread throughout the financial services industry and the FinTech industry remains strong, according to Menon.

At the end of 2020, Singapore’s assets under management reached S $ 4.7 trillion, up 17% year-over-year. This is due to a large influx into traditional and alternative investment strategies and a better reputation in major asset markets.

According to Menon, the financial services sector is exceeding both the added value and employment targets set by the Industry Transformation Map (ITM) 2016-2020.

The five-year average annual growth in value is 5.4%, exceeding the ITM target of 4.3%. The sector created an average of 4,700 net jobs per year, exceeding its target of 4,000.

MAS has started to review its ITM strategy and goals over the next five years, he said.

“The technology will allow for a much more serious restructuring of financial services over the next decade than over the past five years,” Menon said.

“As the world strives for a low carbon future, sustainability will become an increasingly central goal of financial services. “