The city-state economy grew by 7.2 percent in 2021, returning from a 5.4 percent contraction in 2020.
Singapore’s economy expanded at the fastest annual rate in more than a decade in 2021 as the country emerged from its worst recession on record, caused by the deep activity of the coronavirus pandemic.
The city-state’s economy grew by 7.2 percent in 2021, preliminary data showed Monday, broadly in line with the government’s official projection and recovery of the record contraction of 5.4 percent in 2020.
The financial and transportation hub, often seen as a clockwork of global growth, has seen a rocky recovery as governments around the world shifts their coronavirus strategies to live with the pandemic, away from “zero-COVID” policies.
Singapore’s annual gross domestic product (GDP) growth was the fastest since a 14.5 percent expansion in 2010 when the economy emerged from the global financial crisis.
“I expect growth to be relatively lively. “As the world economy begins to improve, I think it will also help to support the overall external demand conditions for Singapore,” said Jeff Ng, an analyst at MUFG. “The biggest threat is still inflation.”
The government has previously said it expects GDP to grow by 3 to 5 percent by 2022.
GDP rose 5.9 percent year-on-year in October-December, the Ministry of Trade and Industry said in a statement, faster than the 5.4 percent growth forecast in a Reuters poll. poll on analysts.
GDP grew 2.6 percent in October-December on a quarter-on-quarter seasonally adjusted basis, higher than the 1.2 percent growth in the previous quarter.
Separately, the Southeast Asian city-state on Monday showed a preliminary 5 percent rise in private home prices in the fourth quarter, the most since 2010.
The government last month introduced a package of measures to cool its property market, including raising stamp duties and tightening loan limits.
Prime Minister Lee Hsien Loong said in his New Year’s message last week that Singapore’s economy was gradually recovering and that the government saw a need to start raising sales taxes.
The government has unveiled a plan to increase the tax on goods and services by 2 percentage points to 9 percent between 2022 and 2025.
While analysts expect the economy to continue to grow, they have warned that the Omicron coronavirus variant could become a drag if social distancing rules are tightened again.
The city-state has vaccinated 87 percent of its population. As of Saturday, 41 percent of the population had received their COVID amplifier shot.
Sung Eun Jung at Oxford Economics expects growth to be driven more by the services sector than manufacturing in 2022 as domestic demand momentum improves.
“We expect monetary and fiscal policy to intensify further this year with planned GST increase contributing to rising price pressures,” she said.
Economists widely expect the central bank to tighten again in April this year as price pressures continue. Similar to major financial hubs around the world, Singapore has seen its inflation rate rise in recent months, with headline prices rising 3.8 percent in November, the fastest in nine years.
The Singapore dollar weakened slightly in thin trading on Monday, in line with modest gains for the US dollar in the broader market. At 1.3510 Singapore dollars per US dollar, it is not far from the seven-week high it reached at the end of last year and analysts said the GDP figure is likely to be supportive.
The Monetary Authority of Singapore unexpectedly tightened its monetary policy at its last meeting in October amid increasing inflationary pressures caused by supply constraints and a recovery in the world economy.