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Singapore’s GDP growth back on track

Singapore economy - Gardens by the Bay
Singapore - Gardens by the Bay

Recording its strongest economic growth in 11 years, Singapore’s Gross Domestic Product (GDP) grew by 14.7% on a yearly basis in the second quarter of 2021, taking first-half growth to 7.7%. This was faster than the 1.5% growth in the previous quarter, upon a low base in the year-ago Q1.

“The strong growth was largely due to the low base in the second quarter of 2020 when GDP fell by 13.3% due to the Circuit Breaker measures (partial lockdown) implemented from 7 April to 1 June 2020,” Ministry of Trade and Industry (MTI) said.

As the delta variant rips across the region, Singapore has remained a relatively bright spot in Southeast Asia, thanks to rapid coronavirus vaccine rollouts. Singapore scored higher GDP growth in Q2 than 11.8% in the Philippines, 7.1% in Indonesia, 6.6% in Vietnam, and 7.9% in China.

Topping among countries with the fastest vaccination rates in the world, Singapore has fully vaccinated more than two-thirds of its 5.7 million population. The benchmark is vaccinating 80% of Singaporeans by September.

Singapore’s GDP growth forecast

Singapore’s MTI has revised its forecast for annual economic growth to 6%-7%, up from 4 to 6%, amid rising demand in export markets. According to the ministry, the stronger GDP growth forecast for Singapore is based on the assumption that the city-state’s vaccination rate will continue to improve from the current 70%, and that its borders will gradually reopen toward the end of the year.

The ministry expects Singapore’s GDP growth to see a gradual recovery in the second half of 2021, supported largely by outward-oriented sectors. Semiconductor and pharmaceutical exports are expected to help power the recovery. Singapore’s key manufacturing sector expanded 17.7%, extending the 11.4% growth recorded in the previous three months.

After tightening social-distancing measures in early May due to resurgence in Covid cases, the government has eased some of its border control measures and its domestic safe distancing rules, which has also helped its domestic economy.

Taking the next step toward “living with COVID-19,” Singapore plans to ease restrictions on travel, social gatherings, mass events, as well as relaxing a ban on dining in restaurants for its fully vaccinated residents.

According to the International Monetary Fund (IMF), Singapore’s economic recovery is expected to remain on track in 2021. Activity is expected to accelerate in the second half of 2021, as vaccines become more widely available, bringing annual growth to 6% in 2021.