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Opening Remarks by PS Mr Gabriel Lim for Economic Survey of Singapore for 1Q 2021

Opening Remarks by PS Mr Gabriel Lim for Economic Survey of Singapore for 1Q 2021

1 Good morning and welcome to this virtual media conference.


2 Details of Singapore’s economic performance, outlook and GDP growth forecast for 2021 are contained in the press release. Let me highlight a few key points.


3 In the first quarter of 2021, the Singapore economy expanded by 1.3 per cent on a year-on-year basis. This is a reversal from the 2.4 per cent contraction in the previous quarter. The performance of the Singapore economy in the first quarter was stronger than expected. The key sectors supporting GDP growth during the quarter were manufacturing, finance & insurance and wholesale trade. On the other hand, tourism- and aviation-related sectors, consumer-facing sectors, and the construction sector continued to contract.


4 Let me now turn to the economic outlook for 2021.


5 Since the Economic Survey of Singapore media briefing in February, the external economic environment has improved, largely due to upgrades in the growth outlook for advanced economies like the US. At the same time, however, the pandemic continues to disrupt activities in many economies, threatening to undermine any recovery. Details of the outlook for key advanced and regional economies are provided in the press release.


6 Domestically within Singapore, while the recent tightening of domestic restrictions and border controls will affect segments of the Singapore economy, the broader economy should still see a recovery this year in tandem with the global economic rebound and further progress in the domestic vaccination programme.


7 However, recent border restrictions on the entry of foreign workers from South Asia will exacerbate ongoing severe labour shortages in the sectors. The manpower crunch, along with the requirement to comply with safe management measures, will significantly impede their recovery, in particular construction, marine and process.


8 While it is possible that the Singapore economy will outperform the “4.0 to 6.0 per cent” growth forecast for 2021,  I wish to flag that there are significant downside risks. The most important downside risk of all, is how the COVID-19 pandemic evolves.


· We can see right now that countries are experiencing recurring waves of infections, with the emergence of more transmissible strains of the virus, the easing of safe management restrictions, and delays in vaccinating their domestic populations. These resurgencesand the spike in infections, as well as the countries’ public health responses to them, will inevitably affect their economic growth.


· Given the experience of the last 15 months, there is hope that even if outbreaks flare up again, countries will be able to avoid repeated blanket lockdowns along with  their high economic cost, but this is far from certain as we have seen over the last few months.


· As these countries include some of our major economic partners in our region, the uncertainty in their outlook also affect Singapore.


9 Domestically when we look ahead, while COVID-19 is generally well under control, and we are making good progress vaccinating the entire population, there remain significant risks and uncertainties in our own COVID-19 situation. These non-economic risks can have a major impact on our GDP growth this year.


10 Therefore, taking into account the above factors, and considering the larger-than-usual degree of uncertainty over the course of the pandemic globally as well as domestically, MTI has decided to maintain the GDP growth forecast for 2021 at “4.0 to 6.0 per cent” for now. We will review this forecast in August when there is another quarter of data, as well as greater clarity over the global and domestic economic situations.


11 Together with my panel members, I am now happy to take your questions. Thank you.

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