Factors Driving Government's Upward Revision of 2021 GDP Growth to 6% to 7%
Ministry of Trade and IndustrySpeakers
Summary
This question concerns the basis for the upward revision of 2021’s GDP growth forecast to 6% to 7% and the economic outlook for 2022, as raised by Mr Liang Eng Hwa. Minister for Transport Mr S Iswaran stated that the revision follows a better-than-expected 7.7% growth in the first half of the year, driven by strong performance in the manufacturing and finance sectors. He noted that high global vaccination rates and Singapore’s reopening will support consumer-facing sectors and alleviate labor shortages, although tourism and aviation will recover more slowly. While outward-oriented sectors remain healthy, the Ministry of Trade and Industry expects continued recovery in 2022 supported by positive global growth. A formal 2022 growth forecast is scheduled for release in November 2021.
Transcript
The following question stood in the name of Mr Liang Eng Hwa –
1 To ask the Minister for Trade and Industry (a) what is the basis for the upward revision of 2021's GDP growth forecast to 6% to 7%; (b) what are the key drivers; and (c) what is the growth outlook for 2022.
Ms Tin Pei Ling (MacPherson): Question No 1.
The Minister for Transport (Mr S Iswaran) (for the Minister for Trade and Industry): Mr Speaker, on behalf of Minister Gan Kim Yong. In August, the Ministry of Trade and Industry (MTI) projected that the Singapore economy would expand by 6% to 7% in 2021, taking into account several developments.
One, the global economic recovery has remained largely on track, notwithstanding the risks posed by the pandemic. High vaccination rates in key advanced economies such as the United States and Eurozone have allowed them to press on with reopening even amidst a rise in infections. While regional economies have had to reimpose tight restrictions to curb a resurgence in cases, they are also ramping up vaccination efforts, which should facilitate the resumption of economic activities in the coming quarters.
Two, Singapore's gross domestic product (GDP) growth in the first half of the year came in at a better-than-expected 7.7% on a year-on-year basis. In particular, the outward-oriented sectors continued to grow strongly, with the manufacturing and finance and insurance sectors achieving growth of 14.5% and 7.4% respectively during this period. At the same time, our vaccination programme has made good progress, which will allow for the progressive easing of domestic and border restrictions over the course of the year.
Barring a major setback in the global economy, the growth of outward-oriented sectors will remain healthy in the second half of the year. The progressive easing of domestic and border restrictions will also help to support the recovery of consumer-facing sectors such as food and beverage services, and alleviate labour shortages in sectors that are reliant on migrant workers such as construction. On the other hand, the tourism- and aviation-related sectors are likely to see a slow recovery due to ongoing global travel restrictions and weak travel demand.
Looking ahead to 2022, MTI expects the Singapore economy to continue to recover as global growth is projected to remain positive. MTI will announce Singapore's 2022 GDP growth forecast in November 2021.