Budget Eyed After GDP Beats Estimates

Spot USD/SGD drops to fresh session lows after GDP data, the pair down 4 pips at 1.3248, from earlier highs of 1.2267.

• The economy grew 3.8% on the quarter in Q4 compared to forecasts of 2.4% growth. These numbers take 2020 growth to -5.4% from the original estimate of -5.8%. This still denotes the worst year for the economy since independence, but stands out against peers in the region.
• The Ministry of Trade and Industry (MTI) maintained its projection for growth in a range of 4% to 6% for 2021 citing faster vaccine rollout in developed economies. The MTI also said the budget would contain more provisions to support the job market. Following the release Singapore's Trade Secretary Lim said pace of economic recovery is still uncertain, and that there are still significant uncertainties around vaccine supply.
• The MAS also weighed in after the release, saying monetary policy stance is unchanged and the current policy remains appropriate. On inflation the MAS said the Q2 print could rise due to base effects.
• As a note, markets expect significant support in the release of the budget on Tuesday, which could help explain the fairly muted reaction to the data.