The buzz surrounding Resorts World Sentosa and Marina Bay Sands has intensified recently, as the resorts prepare for their grand openings and Singapore readies itself for a robust recovery this year.
According to several analysts, the timing could not be better. Economists forecast that the resorts will help fuel growth at up to 6.5 percent this year, following a 2.1 percent contraction last year.
The likelihood of visitor arrivals increasing by a strong 20 percent this year is one of the immediate economic perks of the opening of these integrated resorts, based on the estimates of Leng Seng Choon, an analyst at DMG & Partners.
It is also expected that the resorts will spur further hiring and domestic spending.
However, the real story behind the economic recovery this year goes beyond the opening of the IRs. After all, tourism comprises only 3 to 4 percent of Singapore’s economy.
And like almost every other major industry in Singapore, resorts that are totally dependent on the influx of tourists are still gambling on a reversal in the global economy.
“The fundamental driver of growth this year is still the global demand cycle, and the resorts are just the bonus on top of that,” said Kit Wei Zheng, Citigroup’s economist.
He is one of the economists who based their prediction of growth on the wider services sector, rather than the integrated resorts.
In the recent downturn, services proved to be more resilient than manufacturing, the other main growth driver of the economy. Estimates released on Monday showed that the economy experienced a speed bump in Q4, which was largely attributed to a draw back in manufacturing, particularly in the unpredictable biomedical segment.
The services sector grew at a steadier pace, continuing to increase quarter-on-quarter in the last quarter, and rising year-on-year for the first time in five quarters.
Economists are upbeat that 2010 will be the year of services growth. This is in line with the statement made by the Monetary Authority of Singapore about focusing more on services in the future. The resorts will simply be the most apparent service sector star.
“Services growth will be the key employment driver this year, given the opening of the two integrated resorts and the brighter financial services prospects,” said Selena Ling, an OCBC Economist.
Some economists are worried that the resorts will simply aggravate the existing volatility of Singapore’s economy, dependent as they are on sentiment and external demand.
The lack of knowledge about how much these resorts will actually contribute, indirectly or directly, to the growth of the economy, only adds to the uncertainty.