Singapore’s GDP in 2021 grows at the fastest rate in more than a decade

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Thunderstorm clouds gather above the skyline of Singapore’s central business district on April 5, 2021. Photo taken on April 5, 2021. REUTERS FILE PHOTO

SINGAPORE – Singapore’s economy grew at its fastest annual rate for more than a decade in 2021, as the country emerged from its worst recession on record, caused by the hard blow to economic activity. coronavirus pandemic.

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

The finance and transportation hub, often seen as an indicator of global growth, has experienced a difficult recovery as governments around the world change their coronavirus strategies to live with the pandemic, away from ‘zero’ policies. COVID ”.

READ: Singapore central bank chief says 2021 economic growth could beat expectations

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

“I expect growth to be relatively strong. As the global economy begins to improve, I believe this will also help support overall external demand conditions for Singapore, ”said Jeff Ng, MUFG analyst. “The main threat remains inflation.”

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

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

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

Price pressures

Separately, the Southeast Asian city-state posted a preliminary 5% increase in private housing prices in the fourth quarter on Monday, the highest since 2009.

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

Prime Minister Lee Hsien Loong said in his New Year’s message last week that Singapore’s economy is recovering steadily and the government believes it is necessary to start increasing the sales tax.

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

As analysts expect the economy to continue growing, they have warned that the Omicron variant of the coronavirus 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 received their COVID-19 recall.

Sung Eun Jung of Oxford Economics expects growth to be driven more by the service sector than the manufacturing sector in 2022 as domestic demand dynamics improve.

“We expect monetary and fiscal policies to tighten further this year with the planned GST hike on top of mounting 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 centers around the world, Singapore has seen its inflation rate rise in recent months with all-items prices rising 3.8% in November, the fastest in nine years.

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

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