Fitch revises upward Singapore’s growth forecast to 6.3%

This is higher than their previous full-year forecast of 6.1% GDP.

Fitch Solutions has revised its growth forecast for Singapore to 6.3% from 6.1%, following the expansion of GDP by 6.5% year-on-year (YoY) seasonally adjusted basis in the third quarter.

In a report, Fitch analysts said they are seeing a “stronger private consumption outlook in the remainder of the year” as Singapore's vaccinations progress and travel reopening plans advance.

“Our upward revision to 6.3% growth in 2021 despite the rapid rise in COVID-19 infections reflects our view that the economy has already achieved a high level of resilience against the disease backed by high vaccination rates,” the report said.

The estimate however still sits at the lower half of policymakers' forecast range of 6% to 7% growth in 2021.

Positive developments in Singapore’s COVID situation have also helped domestic demand to remain on an uptrend.

Fitch also changed its forecast for private consumption (from 1.9 percentage points to 2.2 ppt) , gross fixed capital formation (from 0.6 ppt to 1.7 ppt), and government consumption (from -0.6 ppt to 0.6 ppt).

Only net exports are expected to “come in slightly worse,” contributing 2.2 ppt to headline growth in 2021.

UOB, on the other hand, had a higher outlook of 6.5%, citing “positive economic prognosis and strong high-frequency data.”

The bank said it saw a broad recovery across Singapore's key sectors like manufacturing which expanded 7.5% YoY. In its report, said the manufacturing environment “remains to be a strong pillar of Singapore's economic growth.”

Construction also recovered from being a key loser in 2020, expanding 57.9% YoY. The sector is also expected to rise 15.5% by year-end.

Another sector which recorded expansion from the same period last year at 5.5%. The sector’s state, however, “will depend on the recovery of Singapore’s domestic economy and the gradual reopening of its borders.”

Retails sales, on the other hand, is expected to be slow for the rest of 2021.

“This is exacerbated by the elevated COVID-19 risks and the reintroduction of tightened social restriction measures in September 2021,” UOB said.

2022 outlook

2021 dynamic will continue into 2022, according to analysts.

Fitch Solutions said it expects Singapore’s economy to remain resilient and continue posting slightly above-trend growth of 3.6% in 2022.

“More easing of restrictions to further support the retail and services sectors, while a likely greater reopening of international travel will provide a boost to the aviation and hospitality sectors,” the report said.