CapitaLand Integrated Commercial Trust - Annual Report 2021

Economic Overview The road to recovery in 2021 was uneven as the macroeconomic environment remains volatile and uncertain. According to the Ministry of Trade and Industry (MTI), Singapore’s GDP expanded by 7.6% in 2021, rebounding from a 4.1% contraction in 2020, aided mainly by the manufacturing and construction sectors. Although the annual average unemployment rate fell 0.4 percentage points year-on-year (y-o-y) to 2.6% as at 4Q 2021, it remained above pre-pandemic levels. Total population contracted by 4.1% y-o-y to 5.5 million, a second consecutive year of decline. On a y-o-y basis, Singapore’s economy grew by 6.1% in 4Q 2021, moderating from 7.5% in the previous quarter. Both goods and services producing industries expanded in2021. The construction sectorwas thebest performing sector with 20.1% growth in 2021, a reversal from a 38.4% contraction in 2020. Growth was attributed to the resumption in construction activities and a low base effect in the preceding year. Output in the sector was supported by an increase in both public and private sector construction works. On a seasonally-adjusted basis, theGDP of the construction sector pedalled below its pre-COVID level in 2019 by 26.0%, primarily pressured by labour shortages due to border restrictions. On the other hand, the manufacturing sector grew by 13.2% in 2021, buoyed by output expansions from all clusters that were driven by sustained global demand, with the precision engineering, electronics and transport engineering clusters seeing the fastest growth. In 2021, the services producing industries reported a growth of 5.6% y-o-y, a turnround from a 5.1% decline in the previous year. All services producing industries registered full-year expansions with the exception of the administrative & support services sector. The information & communication, real estate and retail trade sectors had significant growths of 12.2%, 10.7% and 10.2% y-o-y respectively. The transportation & storage and accommodation sectors grew 5.0% y-o-y and 1.7% y-o-y respectively for full year 2021 following a pick up in air passengers as travel restrictions eased in 2021, while the food & beverage sector (3.0% y-o-y) grew on the back of stricter dine-in restrictions in 2020. These three sectors grew in 2021, on a turnaround of a double- digit percentage declines in 2020. Support and financial assistance schemes such as Enterprise Financing Scheme, The Courage Fund and Job Support Scheme were introduced to cushion the economic impact caused by COVID-19. However, while Singapore is still headed for positive economic growth, the easing of its border restrictions faces some headwinds due to the spread of the Omicron variant. In 2022, GDP growth in major economies is expected to moderate in comparison to 2021, but remain above pre-pandemic levels. Domestically, Singapore is keeping its COVID-19 situation under control with a high vaccination rate and a steady rollout of booster shots to facilitate progressive easing of domestic and border restrictions. Consumer-facing sectors and sectors with labour shortage are poised to regain momentum in 2022. As of November 2021, MTI expects the economy to expand by 3 to 5% in 2022. With a robust pickup in demand and extended supply disruptions, MTI expects core inflation to average between 1 and 2% in 2022. Singapore Tourism Overview In 2021, Singapore’s tourism sector continued to be under pressure due to continued global travel restrictions and border closures amid the COVID-19 pandemic. Tourism arrivals dropped to 0.3 million, representing an 88% y-o-y decline in 2021 and the lowest record in the last four decades. However, with a high domestic vaccination rate alongside an accelerated Booster Vaccination Programme, Singapore has positioned itself for a progressive reopening of borders to allow safe travel with necessary safeguards in place. Short- term visitors can enter Singapore under Safe Travel Lanes and Vaccinated Travel Lanes (VTLs), or with special prior approval. Signs of revival were noted in Meetings, Incentives, Conventions and Exhibitions (MICE) activities, largely contributed by major events like the Bloomberg New Economy Forum, Restaurant Asia 2021 and Milken Institute Asia Summit. While the surge of the Omicron variant in late 2021 initially brewed uncertainty locally and globally and had an impact on international border reopening, Singapore had navigated through the initial uncertainties and has increasingly opened the borders. While VTL land flight ticket sales were temporarily halted between 23 December 2021 and 20 January 2022, they have since been resumed at a 50% cap before being fully restored in Mid-February 2022. 1 VTLs with Hong Kong, Saudi Arabia, Qatar and UAE were launched on 22 February 2022, while VTLs to the Philippines and Israel were launched on 4 March 2022. Singapore CapitaLand Integrated Commercial Trust 98 Independent Market Review