Many economists have raised their growth estimates for the Singapore economy in 2011, exceeding the official forecast range in some cases.
The services sector will be the prime driver of this growth, even as the challenges of managing capital inflows and inflation persist.
“Services will overtake the manufacturing sector in 2011 as the key contributor to growth,” said Irvin Seah, an economist at DBS. His forecast of 7 percent 2011 growth exceeds the official range and most market estimates.
The Ministry of Trade and Industry is now looking at 4 percent to 6 percent growth next year, a sharp moderation from the record recovery in 2010 but is still above the economy’s estimated underlying growth potential of 3 percent to 5 percent.
Citi economist Kit Wei Zheng also raised his growth estimates for this year and next year to 15 percent and 5.5 percent respectively, driven by recent positive developments in export and manufacturing numbers.
Services associated to regional demand should remain resilient, said Mr. Kit, who believes the “lift from China and Asian domestic demand may be felt less from trade in goods and more from trade in tradeable services”.
Robust services growth will be led by tourism-related activities, and the “other services” segment that captures the contributions of the two integrated resorts, said Mr. Seah.
Mr. Seah believes the gaming segment could “steal pole position from pharmaceuticals as the fastest-growing sector”, and contribute about S$5.2 billion or 1.7 percentage points of his projected 7 percent gross domestic product (GDP) growth for next year.