Singapore’s economy continues to show resilience

Singapore’s economy continues to recover steadily from a sharp contraction in 2020 (Photo: AFP/VNA)

Singapore (VNA) – Singapore’s economy continues to recover steadily from a sharp contraction in 2020 on the back of effective pandemic containment measures, accelerated vaccination rollout, and extended policy support for affected businesses and households, revealed a report of the ASEAN+3 Macroeconomic Research Office (AMRO) on November 8.

In the 2021 Annual Consultation Report on Singapore, the AMRO said the government’s roadmap to ensure safe reopening and support a transition to the new COVID-19 endemic normal is crucial in securing Singapore’s economic recovery in 2021 and beyond.

The Singapore economy is forecast to grow by 6.3 percent in 2021 and 4 percent in 2022, underpinned by the recovery in domestic economic activities and robust exports. However, the recovery in tourism-related sectors will remain slow due to the continued restrictions on cross border travel reflecting the resurgence of the pandemic and the slow pace of vaccination in many countries.

Meanwhile, Singapore’s inflation has picked up, in line with the rebound in oil prices and strengthening economic activity. After a decline to minus 0.2 percent in 2020, both headline inflation and core inflation are expected to increase moderately in 2021.

In the short term, key risks to growth are a resurgence of the COVID-19 pandemic and the resulting adverse effects on hard-hit businesses and households. Rising financial distress among the more vulnerable businesses in Singapore and abroad can lead to deterioration in banks’ asset quality, although the increase in banks’ provisions and strong capital buffers are expected to help mitigate the rising credit risk.

In the medium term, potential changes to international tax rules could affect tax revenues and investments by multinational companies. Over the longer term, Singapore would also need to contend with the major challenges arising from an aging population and climate change.

The report was based on AMRO's virtual 2021 Annual Consultation Visit to Singapore from May 17 to June 18, and data and information available up to July 31, 2021./.