Singapore central bank chief says 2021 economic growth could exceed forecast

SINGAPORE: Singapore's economic growth could exceed the upper end of the official 4% to 6% forecast range this year, central bank chief Ravi Menon said, citing strengthening global demand and progress in the city-state's COVID-19 vaccination programme.

"This year is a contest between the virus and the vaccine," the Monetary Authority of Singapore's (MAS) managing director told a news conference on Wednesday for the release its annual report.

The Singapore economy has recouped during the first quarter of 2021 the aggregate output loss incurred during the pandemic, Menon said. The broader economy should see a recovery in the second half, he added.

The Singapore government maintained the 2021 official forecast at 4% to 6% in May, following tightened restrictions locally due to a rise in COVID-19 cases. The forecast will be reviewed in August.

The economy had posted its worst recession last year induced by the COVID-19 pandemic.

The city-state is often seen as a bellwether for global growth as international trade dwarfs its domestic economy.

Menon said downside risks include the emergence of more infectious or lethal virus mutations, as well as a sharp pick-up in inflation in the United States.

The central bank maintained its accommodative monetary policy at its last meeting in April. The next policy review is due in mid-October.

The policy stance remains appropriate for now, Menon said.

Singapore private home prices have risen for four straight quarters, with the market up 3.3% in January-March, the steepest increase in nearly three years, fueling market expectations that the government is likely to intervene soon.

The property market has been "remarkably resilient" in the face a recession last year and continued uncertainty, Menon said.

Authorities were highly vigilant about a sustained increase in home prices relative to income trends, and their goal was to make sure the market did not get ahead of economic fundamentals, Menon said. However, he said the market was not overheated currently.

The central bank also revised its 2021 headline inflation forecast to 1.0% to 2.0% from 0.5% to 1.5% previously. It kept the core inflation outlook unchanged at 0 to 1%.