SINGAPORE – Singapore prepares to reopen international borders and easing Covid restrictions next week, and that will be “the biggest economic driver for growth,” said Brian Tan, senior regional economist at Barclays.
“According to our estimates, if we see a 10% increase in mobility in places like the leisure and work areas, you’d get around 3% to 4% GDP growth. It’s a pretty big jump,” Tan said. CNBC’s “Street Signs Asia” on Friday.
Starting March 29, people will be able to socialize in groups of 10 instead of the current 5-person limit. More staff will be able to return to the office and capacity limits for large events will also be increased, Singapore Prime Minister Lee Hsien Loong announced on Thursday.
“We also expect that the resumption of international travel… about 4% of GDP is likely to be filled,” Tan added.
A survey of 12,000 travelers by Expedia found that Singaporeans are least likely to travel during a pandemic (59%) and more likely to want to travel (43%) during a trip. their next.
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However, along with that growth comes inflationary pressure in the country, along with an already tight labor force market and Global commodity prices rise.
“That should set the stage for the Monetary Authority of Singapore to implement a fairly aggressive policy tightening in April,” the analyst said, referring to the country’s central bank.
Analysts from research firm Capital Economics and DBS Bank also said on Friday that they were expecting the MAS to tighten policy at its meeting next month after listing the restrictions.
“We think that will be positive for the currency,” Tan said.
The Singapore Dollar was trading at $1,356 Singapore dollars against the greenback. Singapore benchmark index, Straits Times Index0.5% higher on Friday, a day after a series of announcements about easing measures.
All fully immunized travelers and unvaccinated children aged 12 and under can also enter Singapore without needing to obtain an entry permit starting from 1 April.
Tan added that reopening the border would pave the way for a “good macroeconomic outlook” in Singapore, by helping to attract more foreign direct investment.
“The fact that we were able to reopen before some other economies in Asia also suggests that it reinforces some of the safe-haven positions that Singapore has.”