Singapore set for record growth in 2021 after weathering Covid-19 storm

By Andrew Bulkeley

Image by koon boh Goh from Pixabay

// Economic recovery will rely on global improvement

// Corona-related deaths and illness relatively low

// No currency support expected from MAS

Singapore’s trade-dependent economy is expected to turn upward in the first half of 2021 and accelerate to a significant improvement for the full year after the corona crisis pushed it to the city-state’s worst-ever economic contraction.


The Singapore economy declined 5.8% last year, which was better than economist and government predictions of around 6%. As vaccines are introduced around the world and life normalizes, the economy is expected to grow between 4% and 6%, according to government forecasts.


2020 was the sharpest economic decline since the country of 5.7 million became independent from Malaysia in 1965 and was the first annual contraction since 2001, which came on the heels of 9/11 and the internet bubble.


The country’s manufacturers benefitted in the second quarter as buyers looked to restock shelves depleted during lockdowns. However, the country’s tourist and aviation sectors are still hoping the government will continue to provide fiscal support when a budget is announced in February – last year the Singapore government doled out financial aid equal to about 20% of its GDP.

Up against dollar, down against euro

“Though activity continues to pick up, we don’t expect a return to positive growth until the second quarter of 2021. A full recovery for this regional hub will require the normalization of global travel and trade, which we consider unlikely this year,” Bloomberg economist Tamara Mast Henderson said in a report quoted by the newswire.


Meanwhile the country’s currency only made mild gains against the slumping dollar in 2020 and lost out to the euro because of the country’s neutral stance against its currency. The Singapore dollar strengthened to 1.3453 versus the US dollar from 1.3211 at the end of 2019, or 1.8%, compared with a 6.6% decline against the euro to 1.616 from 1.51 at the end of 2019.


The Monetary Authority of Singapore, the country’s central bank, isn’t seen changing its stance on its currency in 2021 and analysts said the government is more likely to rely on economic recovery as well as the fruits of its 2020 measures to support the economy rather than further loosening its purse strings.


In addition to the four government stimulus packages, Singapore has also so far weathered the global corona crisis better than many other countries. The country has had just 59,113 cases resulting in 29 deaths, putting it in the bottom third of countries around the world and level with New Zealand, according to figures from Johns Hopkins University compiled by Statista.

‘Bright’ future

Analysts have warned that an unexpected outbreak could harm the country’s economic recovery but Singapore is responding to the good figures by gradually reopening its economy. Even tourism businesses are allowed to once again welcome customers although short-term visits from abroad are still not allowed.


“Thanks to a relatively small population, the outlook for Singapore is extremely bright for 2021 by relative standards,” HSBC Global Research analyst Joseph Incalcaterra recently told CNBC. The country has promised to have vaccines for its entire population by the third quarter and is expected to reacht its pre-corona GDP in 2022.