Singapore’s economy rebounds 7.2% in 2021, despite challenges brought on by the ongoing pandemic, however forecasts for 2022 are not as optimistic due to the omicron variant.
After experiencing a 5.4% shrink in 2020, Singapore’s GDP grew 7.2% last year, the fastest rate the nation has experienced since 2010, when it expanded by 14.5%.
The Singapore government is targeting further economic recovery in the new year, through the implementation of booster Covid-19 shots and reopening of businesses, however the current outbreak of the omicron variant may put a halt to these plans.
The Singapore government expects a growth rate between 3% and 5% for 2022.
“The year ahead will be a time of transition,” Prime Minister Lee Hsien Loong said in his New Year’s message. “We will progressively phase out emergency support measures as businesses revive, though a few sectors will take longer.”
This growth is due to efficient vaccine rollout, 87% of Singapore’s population having received both doses by the end of 2021. Unfortunately, Covid-19 continues to persist, the city experiencing its largest outbreak in October 2021, resulting in increased restrictions, that are likely to tighten due to the new omicron variant.
This unfortunately slowed Singapore’s GDP expansion, which dropped in growth rate to 5.9% in Q4 2021, following a 7.1% increase in July to September 2021.
Singapore’s manufacturing sector, however, grew 12.8% due to consistent global demand for electronics components. The nation’s services and construction sectors also bounced back by 5.2% and 18.7% respectively.
The electronics and precision engineering sectors still recorded strong output growth in the fourth quarter of 2021, “driven by sustained global demand for semiconductors and semiconductor equipment respectively,” said Singapore’s Ministry of Trade and Industry.
Manufacturing will continue to contribute to this growth, according to a December report published by DBS Group Holdings, but Singapore cannot be dependent on this alone.
“Although semiconductor equipment billings and global shipments of semiconductors remain robust …, recent data is suggesting that global demand in this aspect has peaked and this all-important driver of Singapore’s growth could see [a] weaker performance in the coming quarters,” the bank stated.
In order to maintain this growth, booster shots will be important for stabilising Singapore’s economy, allowing for retailers, restaurants, and other consumer-sector businesses to recover operations. The government is working hard to fulfil this goal, 41% of the population already having received their third dose of the Covid-19 vaccine by the end of 2021.
Singapore is opening up cross-border travel through quarantine exempt “vaccinated travel lanes” but ticket sales are suspended until January 20th 2022 due to concerns over the omicron variant’s growing presence in Asia.
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