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Bloomberg

Singapore Sees Growth of 4%-6% in 2021 Amid Global Recovery

(Bloomberg) — Singapore said its economy will probably expand 4% to 6% next year as nations continue to recover from the worst of the coronavirus pandemic and as travel restrictions and local safety measures are eased.The city-state also narrowed its forecast for this year’s contraction, the Ministry of Trade and Industry said in a statement Monday, highlighting an improved outlook for manufacturing, driven primarily by electronics.“On balance, given the improved growth outlook for key external economies, as well as a further easing of global travel restrictions and domestic public health measures that is expected in the year ahead, the Singapore economy is projected to return to growth in 2021,” MTI said.Singapore’s revised growth outlook comes as recent breakthroughs in vaccine developments raise hopes the pandemic can be contained. Risks remain though, including fresh lockdown measures and premature withdrawal of policy support. Easing travel restrictions also won’t be straightforward, with rising virus cases in Hong Kong delaying the start of a much-anticipated travel bubble between the two Asian financial hubs.“The bigger picture is dependent on the vaccine progress and how the recent global resurgence will hurt external demand and prospects for re-opening of international borders,” said Selena Ling, head of treasury research and strategy at Oversea-Chinese Banking Corp. in Singapore. “Domestically-oriented services remain held at ransom by the Covid developments for now.”For 2020, MTI revised its outlook to a contraction of 6%-6.5%, narrower than the decline of 5%-7% forecast earlier. It also said the economy shrank less than previously estimated in the three months through September. Gross domestic product declined 5.8% in the third quarter from a year earlier, according to final estimates released by MTI. That was better than the previous estimate of a 7% contraction, and compares with a median forecast of -5.5% in a Bloomberg survey of economists.Healthier exports and industrial production have led economists, including at Maybank Kim Eng Research Pte Ltd., to upgrade their growth projections for Singapore. The bank had forecast the city-state would post a 5.1% contraction in the final third-quarter estimate, helped especially by pharmaceuticals manufacturing and improvement in real estate, retail trade, and transportation and storage, according to a report last week.An easing in the virus count in Singapore has given room to policy makers looking to ease restrictions that have hindered business re-openings. The daily number of new cases, including incoming travelers ordered to quarantine, has hovered in single digits for most of the past few weeks.Singapore officials have said there’s still scope to provide more fiscal stimulus after pledging about S$100 billion ($74 billion) in aid so far this year. Prime Minister Lee Hsien Loong said he sees the government running a budget deficit at least through early next year, and perhaps “a while” longer, in order to support ailing consumers and businesses.On a quarterly basis, the economy grew a non-annualized 9.2% from the previous three months. The data follow the second quarter’s 13.3% plunge from the same period in 2019, which marked a record in data going back to 1990.(Updates with comment from economist in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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