Singapore updates GDP for the primary quarter and financial projections for full yr 2021

A man wearing a face mask walks past a mural in Chinatown in Singapore on April 1, 2020.

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SINGAPORE – Singapore’s economy grew the fastest in more than a year in the first quarter of 2021, aided by stronger-than-expected manufacturing, official data showed on Tuesday.

However, the government warned of “heightened uncertainties” due to the Covid-19 pandemic in the coming months and kept its growth forecast for Singapore at 4% to 6% for 2021.

The Southeast Asian economy grew 1.3% year over year in the quarter ended March, the Ministry of Commerce and Industry said in an economic update.

This is the highest growth rate in Singapore since the fourth quarter of 2019 and an improvement on official forecasts of expansion of 0.2%. The latest GDP pressures also surpassed the 0.9% year-over-year growth forecast by analysts in a Reuters poll.

Quarterly, the economy in Singapore grew 3.1% – faster than the previous government estimate of 2%.

This is how the various sectors developed in the first three months of 2021:

• The manufacturing sector grew by 10.7% compared to the previous year, which can be attributed to stronger production in the electronics, precision mechanics and chemistry clusters.
• Construction declined 22.7% yoy, negatively impacted by declines in public and private sector projects.
• The service industry shrank slightly by 0.5% compared to the previous year – compared to the 4.7% decline in the previous quarter.

Singapore has been grappling with a surge in Covid-19 cases in recent weeks, prompting the government to impose stricter measures for about a month from May 15. A planned air travel bubble with Hong Kong has also been postponed.

The Department of Commerce and Industry said the tightening of domestic restrictions and border controls was a “setback” for certain industries.

Song Seng Wun, an economist at Malaysian bank CIMB Private Banking, said Singapore’s economic development depends to a large extent on what happens to the Covid-19 outbreaks in the region and the global economic recovery.

That’s because Singapore has a “fairly small” domestic market while exports are up to three times the size of the economy, Song told CNBC’s Street Signs Asia after the latest GDP data release. According to the World Bank, Singapore’s export quota of over 170% is one of the highest in the world.

“Global demand for Singapore’s key exports remains fairly high, so export-oriented industries, especially goods, are sure to fuel Singapore’s growth,” said Song.

Overall, the Singapore economy is likely to recover this year “in parallel with the global economic recovery and further progress in the domestic vaccination program,” said the Ministry of Commerce and Industry. She added that she would review her economic forecast in August.

As of Monday, the country has reported more than 61,800 Covid cases and 32 deaths since early 2020, data from the Ministry of Health showed. Nearly 2 million people in Singapore – or around a third of the population – received at least one dose of the coronavirus virus on May 17, official data showed.