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Singapore's 2021 GDP grows at fastest pace in over a decade

Economic Indicators Jan 03, 2022 12:30AM ET
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© Reuters. FILE PHOTO: Storm clouds gather over the skyline of the central business district in Singapore April 5, 2021. Picture taken April 5, 2021. REUTERS/Edgar Su

By Chen Lin

SINGAPORE (Reuters) - Singapore's economy expanded at its fastest annual pace in over a decade in 2021 as the country emerged from its worst recession on record, caused by the deep hit to activity from the coronavirus pandemic.

The city-state's economy grew 7.2% in 2021, preliminary data showed on Monday, broadly in line with the government's official projection and rebounding from the record 5.4% contraction in 2020.

The financial and transport hub, often seen as a bellwether of global growth, has staged a rocky recovery as governments around the world shift their coronavirus strategies to living with the pandemic, away from "zero-COVID" policies.

Singapore's annual gross domestic product growth was the fastest since a 14.5% expansion in 2010, when the economy emerged from the global financial crisis.

"I'm expecting growth to be relatively buoyant. As the world economy starts to improve, I think that will also help to support the overall external demand conditions for Singapore," said MUFG analyst Jeff Ng. "The main threat continues to be inflation."

The government has previously said it expects GDP to grow 3% to 5% in 2022.

GDP rose 5.9% in October-December on a year-on-year basis, the Ministry of Trade and Industry said in a statement, faster than the 5.4% growth forecast in a Reuters poll on analysts.

GDP grew 2.6% on a quarter-on-quarter seasonally adjusted basis in October-December, higher than the 1.2% growth in preceding quarter.

PRICE PRESSURES

Separately, the Southeast Asian city-state on Monday posted a preliminary 5% rise in private home prices in the fourth quarter, the most since 2010.

The government implemented a package of measures to cool its property market last month, including raising stamp duties and tightening loan limits.

Prime Minister Lee Hsien Loong said last week in his New Year message Singapore's economy is recovering steadily and that the government sees a need to start raising sales tax.

The government has flagged a plan to raise the goods and services tax by 2 percentage points to 9% between 2022 and 2025.

While analysts expect the economy to continue to grow, they cautioned that the Omicron coronavirus variant could become a drag if social distancing rules are tightened again.

The city-state has vaccinated 87% of its population. As of Saturday, 41% of the population has received their COVID-19 booster shot.

Sung Eun Jung at Oxford Economics expects growth to be led more by the service sector than the manufacturing in 2022 as domestic demand momentum improves.

"We expect monetary and fiscal policies will further tighten this year with planned GST hike adding to rising price pressures," she said.

Economists widely expect the central bank to tighten again in April this year as price pressures persist. Similar to major financial hubs around the world, Singapore has seen its inflation rate rise in the past few months with headline prices up 3.8% in November, the fastest in nine years.

The Singapore dollar weakened slightly in thin trade on Monday, in line with modest gains for the U.S. dollar in the broader market. At S$1.3510 per dollar, it is not far from the seven-week high it touched at the close of last year and analysts said the GDP figure would likely be supportive.

The Monetary Authority of Singapore unexpectedly tightened its monetary policy at its last meeting in October amid mounting inflationary pressures caused by supply constraints and a recovery in the global economy.

Singapore's 2021 GDP grows at fastest pace in over a decade
 

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Comments (5)
Ibrar Kazmi
Ibrar Kazmi Jan 03, 2022 1:51AM ET
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good
William Bailey
William Bailey Jan 03, 2022 12:27AM ET
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Fake news… comparisons to 2020 is just stupid .
Ac Tektrader
Ac Tektrader Jan 03, 2022 12:04AM ET
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Chinese money being moved to a market with less risk.
Chad RicherThanYou
Chad RicherThanYou Jan 02, 2022 9:58PM ET
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That is because they actually produce things
my name
my name Jan 02, 2022 9:49PM ET
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singaPoor is not a country. singaPoor is a CITY!
Edward Chong
Edward Chong Jan 02, 2022 9:49PM ET
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if u dont know anything. please dont sprout rubbish.
 
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