Even as the world continues our struggles with the pandemic and its latest Omicron variant, Singapore’s GDP is expected to grow around 3.0 to 5.0% in 2022, according to Ministry of Trade and Industry (MTI).
This recovering economy is also reflected in our employment statistics. By third quarter of 2021 (3Q2021), total employment had declined by 196,400 to a final unemployment rate of 2.7%. In fact, as of Q32021, the ratio of job vacancies to unemployed persons was at 2.09: 1 (that’s 209 jobs available for every 100 unemployed persons). This is encouraging news for job seekers. Additionally, according to employment outlook for 1Q2022 by ManpowerGroup, 39% out of 505 employers in Singapore are planning to hire in 2022.
Likewise, the OCBC SME index, which analyses over 100,000 SME bank customers’ transaction data, also reflects the growing positive sentiment for small and medium-sized enterprises. The 3Q2021 SME index remained positive for the third consecutive quarter at 53.6 (a reading of 50 indicates expansionary business activity).
Here are the 4 sectors that are expected to do well in 2022.
#1 Finance And Insurance
Banking, finance and insurance sector is the 3rd largest contributor to GDP, accounting for 15.7% in 2020. In 3Q2021, growth in the finance & insurance sector came in at 9.0% year-on-year, extending the 9.8% expansion in the previous quarter.
The strong growth of the sector was mainly driven by the insurance segment, which was spurred by a demand for life insurance products. General insurance saw a rise as overall business activity improved. Supporting activities such as payment processing services also recorded a strong performance amidst the rise in e-payments. Likewise, the sentiment-sensitive segments (fund management, security dealing activities and forex segments) continued to post robust expansions. The banks segment registered positive albeit weaker growth than the other segments, reflecting a slower increase in net fees and commissions.
Consistent with Manpower Group’s 2022 employment outlook, 28% of employers in banking, finance, insurance, and real estate sector have expressed their plans to hire.
#2 Information, Communications And Technology (ICT)
The Infocomm Tech sector is expected to be driven by healthy demand for IT and digital solutions. With the pandemic accelerating digitalisation for many industries, with even hawkers and seniors moving to cashless payments, the move towards digital solutions is inescapable and the ICT sector is set to expand.
According to Minister for Communications and Information Josephine Teo, around 20,000 more digital jobs will be created by committed investments that the Economic Development Board secured in 2019 and 2020. These digital roles will span manufacturing, professional services, biomedical and other sectors that are transforming to cope with the digital age.
This demand for IT is also broad-based with SMEs in the ICT sector showing positive sentiment. According to OCBC SME index, SMEs in the sector recorded a strong increase in collections of 64% year-on-year in 3Q2021. The sector continues to be driven by the increased digitalisation of businesses with Software Development being the strongest subsegment.
Total services trade expanded by 7.5% on a year-on year basis in 3Q2021. Both the exports and imports of services recorded growth during the quarter. The growth in service exports was largely due to a rise in the exports of other business services, such as financial services, and maintenance & repair services. The rise in service imports mainly reflected an increase in the imports of other business services, such as manufacturing services and telecommunications, computer & information services.
Hiring expectations for service firms were also positive. According to Statistics Singapore’s latest Business Expectations Survey for the Services Sector, 10% of service firms expected to increase hiring in the fourth quarter of 2021 as compared to the third quarter. While all service sectors reported a positive hiring outlook, firms in the retail trade sector had the strongest hiring sentiments. 29% of retail trade firms were expecting to increase hiring in the fourth quarter. On the other hand, only 4% firms in the real estate sector were expecting to hire more workers in the fourth quarter.
SMEs in business services also continued their positive sentiment according to the OCBC SME Index, driven by an 18% increase in collections year-on-year.
#4 Manufacturing And Wholesale Trade
Despite being a tiny, dot of an island on the world map, Singapore surprisingly has a strong manufacturing scene (mainly electronics, chemicals, biomedical and precision engineering). In 2020, the manufacturing sector remains Singapore’s largest contributor to GDP at 21.5% – an increment from 20.9% in 2019.
According to EDB’s latest Business Expectations Survey for the Manufacturing Sector, hiring expectations in the sector were positive, with a net weighted balance of 11% of manufacturers expecting to increase hiring in the fourth quarter of 2021 as compared to the third quarter.
The manufacturing sector is projected to continue to expand in the electronics and precision engineering clusters supported by sustained global demand for semiconductors. This expansionary sentiment also extends to SMEs which showed a 24% increase in collections year-on-year according to OCBC SME index.
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