Singapore, Nov 8 (IANS): Singapore's economy continues to recover steadily from a sharp contraction in 2020 on the back of effective containment measures, accelerated Covid-19 vaccination rollout, and extended policy support for affected businesses and households, said a report published by the ASEAN+3 Macroeconomic Research Office (AMRO) on Monday.

The AMRO report said that Singapore's economy is forecast to grow by 6.3 per cent in 2021 and 4 percent in 2022, underpinned by the recovery in domestic economic activities and robust exports, reports Xinhua news agency.

However, the recovery in tourism-related sectors will remain slow due to the continued restrictions on cross-border travel, reflecting the resurgence of the pandemic and the slow pace of vaccination in many countries.

Previously, the Monetary Authority of Singapore (MAS) said that Singapore's economy will grow by 6 to 7 per cent in 2021, and continue rising at a slower but still-above trend pace in 2022, barring the materialization of downside risks arising from the evolution of the virus or global economic developments.

It also said that prospects for the travel-related sector have improved slightly even though its recovery is likely to be protracted.

The AMRO report said that key risks to Singapore's economic growth in the short term are a resurgence of the Covid-19 pandemic and the resulting adverse effects on hard-hit businesses and households.

Rising financial distress among the more vulnerable businesses in Singapore and abroad can lead to a deterioration in banks' asset quality, although the increase in banks' provisions and strong capital buffers are expected to help mitigate the rising credit risk, it added.

In the medium term, potential changes to international tax rules could affect tax revenues and investments by multinational companies.

Over the longer term, Singapore would also need to contend with the major challenges arising from an aging population and climate change, according to the report.