PRIVATE-SECTOR watchers have raised estimates for full-year growth, even though the economy is still expected to stay underwater in the first quarter.
Singapore's gross domestic product (GDP) may grow by 5.8 per cent in 2021, before cooling to 3.8 per cent in 2022, according to the results of the latest quarterly survey from the Monetary Authority of Singapore (MAS).
Analysts' forecast for 2021 is higher than the 5.5 per cent growth predicted in end-2020, and falls within the government's official outlook range of 4 per cent to 6 per cent.
Watchers also tipped a 42 per cent chance that the economy could blow past official expectations. That's an increase from results of the last survey, which pointed to a 38.2 per cent chance of the economy surpassing 6 per cent growth.
The cheerier estimate came on optimism about the economic contributions of the manufacturing sector and finance and insurance services.
Manufacturing is now expected to expand by 4.7 per cent in 2021, better than the 4.5 per cent expected in end-2020, while finance and insurance could grow by 5.8 per cent, against the earlier projection of 5.1 per cent.
"The manufacturing outlook is boosted by the normalisation and recovery in spending and trade, which has been less impacted by the pandemic and lockdowns," Maybank Kim Eng senior economist Chua Hak Bin said.
These increases should offset slower growth in areas such as construction, which is now expected to grow by 22.5 per cent, down from an earlier projection of 28.4 per cent. Accommodation and food services, an industry badly hit by the pandemic, is also expected to clock a more subdued 11 per cent growth, against the previous forecast of 15 per cent.
The overall forecast for Q1 2021 remains negative at -1.1 per cent, albeit slightly better than the earlier -1.5 per cent project.
Still, the economy is expected to turn around in Q2 2021, when it could swell by 14.6 per cent. The Republic had seen a trough in the year-ago period, during its two-month "circuit breaker" to curb the spread of Covid-19.
The survey of professional forecasters, sent out on Feb 15, reflects the opinions of 24 economic analysts and does not represent MAS's own views.
These analysts named a worsening Covid-19 pandemic, geopolitical tensions such as conflict between the United States and China, and a global pullback in macroeconomic policy support as the top economic downside risks - the same three spectres identified in the quarter before.
Besides Covid-19 uncertainties, "tensions in the Taiwan Strait may also pose headwinds to economic recovery", said UOB economist Barnabas Gan.
Otherwise, successful virus containment amid growing vaccine roll-outs, as well as the reopening of international borders, were seen as potential upsides.
But observers were also more confident in the boost from the manufacturing sector, thanks to a tech up-cycle and global demand for electronics. A full 50 per cent pegged manufacturing as an upside, from 22.2 per cent before.
Said OCBC chief economist Selena Ling: "The current global chip shortage may give a bit of a lift to Singapore's electronics industry, but the key to a full recovery for Singapore would need international borders to reopen and more economic activities to resume and confidence to return."
Mr Gan, who forecasts a full-year economic expansion of 5 per cent, added that Singapore could benefit from "a more constructive and multilateral approach in trade" under new US President Joe Biden, alongside possible ratification of the Regional Comprehensive Economic Partnership mega-trade deal in late 2021.
Headline or all-items inflation is expected to come in stronger at 0.9 per cent in 2021, compared with median expectations of 0.6 per cent in the last poll; the survey respondents indicated that consumer prices will most likely increase by 1 per cent to 1.4 per cent.
"The inflation risk is modestly tilted to the upside, partly due to the rebound in crude oil prices and the low base last year," said Ms Ling, while framing the price trend as normalisation, rather than "runway inflation".
Meanwhile, Singapore's overall unemployment rate is tipped to touch 2.9 per cent at end-2021, slightly better than the earlier forecast of 3 per cent.