Singapore ’s economy is set to expand at a faster clip than the government previously expected as the city state shakes off an uptick in virus cases and looks to reopen more sectors through to the end of the year. The city state revised its forecast for annual economic growth to 6-7 per cent, the Ministry of Trade and Industry said on Wednesday as it reported final second-quarter data. In its initial second-quarter GDP report last month, the agency had left the annual forecast unchanged at 4-6 per cent. Among nine economists surveyed by Bloomberg who updated their Singapore GDP forecasts this month, six saw growth exceeding 6 per cent. “Barring a major setback in the global economy, the Singapore economy is expected to continue to see a gradual recovery in the second half of the year, supported in large part by outward-oriented sectors,” the ministry said in a statement accompanying the data. “The progressive easing of domestic and border restrictions as our vaccination rates continue to rise will also help to support the recovery of our consumer-facing sectors and alleviate labour shortages in sectors that are reliant on migrant workers.” Singapore to relax social-distancing rules for fully vaccinated residents Singapore has remained a relative bright spot in Southeast Asia as the Delta variant rips across the region, severely threatening economies that are struggling to boost their vaccination rates. Thailand reported a record high in daily virus deaths on Tuesday, with Malaysia also recently setting new daily case records. The city state has fought some pockets of the Delta variant over the past few months, but officials have allowed for further easing of restrictions given the city state’s vaccination rate, with 70 per cent of the population now fully inoculated . In a speech on Sunday night on the eve of the country’s 56th independence day, Prime Minister Lee Hsien Loong said residents could “look forward to a careful, step-by-step reopening of our economy”. Tamara Mast Henderson, Bloomberg’s economist for Southeast Asia, said: “Singapore’s smaller second-quarter contraction and brighter outlook for [the third quarter[ boost the economy’s prospects for 2021 – presenting upside risks to our forecast for 6.2 per cent growth in 2021. “With 70 per cent of the population fully vaccinated earlier than targeted, the government already started to peel back virus curbs on August 10, and will further ease restrictions on August 19. Activity should gain significant momentum once herd immunity is reached in early September, allowing full reopening.” The stronger GDP forecast is based on the assumption that the city state’s vaccination rate will continue to improve from the current 70 per cent, and that its borders will gradually reopen toward the end of the year, according to the Trade and Industry Ministry. A faster reopening and relaxation of virus curbs in the third quarter “could bode well for consumer spending and hence domestic-oriented services,” said Selena Ling, head of research and strategy at Oversea-Chinese Banking Corp. in Singapore. “What would be key is the recovery in the domestic labour market and the 2022 core CPI expectations that could pave the way to monetary policy normalisation.” Edward Robinson, deputy managing director and chief economist of the Monetary Authority of Singapore, told reporters after Wednesday’s data release that “the current monetary policy stance” – which aims for no appreciation of the Singapore dollar against a basket of currencies of its trading partners – “remains appropriate for now”. Why Singapore is banking on a cartoon to keep Indian tourists interested The government on Wednesday also published final GDP estimates for the second quarter, which showed the economy contracted 1.8 per cent from the previous three months on a non-annualised, seasonally adjusted basis, slightly better than the minus 2 per cent median estimate in a Bloomberg survey. That compares with the ministry’s advanced reading last month of a 2 per cent contraction in the April-to-June period, when fresh mobility restrictions weighed heavily on the food and beverage and retail sectors, while tourism-related businesses continued to struggle. In absolute terms, GDP remained 0.6 per cent below its pre-pandemic level in the second quarter of 2019. On a year-on-year basis, economic growth was reported at 14.7 per cent, comparing favourably with a disastrous second quarter in 2020, the data on Wednesday showed. The median in the Bloomberg survey was for 14.2 per cent expansion, after the government’s earlier estimate had shown 14.3 per cent growth.