Singapore’s economic growth is expected to have moderated in the fourth quarter, partly hurt by uncertainty caused by the Omicron Covid-19 variant and analysts say the outlook for next year will hinge on the global progress made against the pandemic.
Gross domestic product (GDP) is seen expanding 5.4% from the same period a year earlier, according to the median forecast of economists in a Reuters poll, marking the fourth straight quarter of growth. The economy grew 7.1% in the third quarter.
“The drop in year-on-year growth rates would be largely due to unfavourable base effects,” Brian Tan, regional economist at Barclays said in a report, noting the sharp rebound a year ago from the pandemic-led downturn.
Tan sees overall growth for 2021 at 6.8%.
Singapore’s economy is likely to grow about 7% in 2021 and 3-5% in 2022, according to official forecasts.
Growth in the city state has been picking up this year from the damage caused by virus-related restrictions and the sluggish global economy, as countries around the world shifted their strategies to living with the coronavirus.
Ticket Sales Suspended
However, the tourism hub has suspended the sale of tickets for arriving flights and buses under its quarantine-free travel programme last week as the Omicron variant spreads.
Singapore has vaccinated 87% of its population. As of Monday, 38% of the population has received their Covid-19 booster shot.
“Assuming that Omicron blows over by early 2022, then a step up in services momentum should materialise,” Selena Ling, OCBC Bank’s head of treasury research and strategy, said. She expected a similar future for construction, where border relaxation may allow for more foreign workers to return.
Ling is expecting growth next year in line with official forecast.
The central bank unexpectedly tightened its monetary policy at its last meeting in October amid mounting inflationary pressures caused by supply constraints and a recovery in the global economy.
Economists widely expect the central bank to tighten again in April next year as price pressures persist.
- Reuters with additional editing by Jim Pollard
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