Photographer: Wei Leng Tay / Bloomberg
Photographer: Wei Leng Tay / Bloomberg
Singapore’s economy has continued its slow recovery from the worst slump in the country’s history, with pillars such as trade and tourism being hit by the coronavirus pandemic.
Gross domestic product grew 2.1% on a seasonally adjusted basis over the past quarter, compared to the previous three months, according to forecasts from the Ministry of Trade and Industry released on Monday. Driven by quarterly gains in construction and services, the increase reached the average forecast of 1.3% in a Bloomberg survey among economists.
For the full year, the city-state’s economy shrank by 5.8%. Although better than the 6% drop expected by economists, it is the worst performance since independence more than half a century ago and the first annual contraction since 2001.
The performance is “definitely encouraging in that it was better than expected for the fourth quarter and also for the full year, thanks to the third quarter’s upward revision,” said Selena Ling, head of research and strategy for treasury at Oversea-Chinese Banking Corp in Singapore. As vaccinations are now underway and a further easing of restrictions at the end of December, “we will hopefully see the Singapore economy continue to stabilize in the first half of 2021 and regain its position on more economic green shoots to bloom. “
From now on Singapore
Singapore wants to rebound due to worst downturn since independence
Source: Department of Statistics in Singapore, Ministry of Trade and Industry
The Singapore dollar rose 0.3% at S $ 1.3184 against the US dollar from 10:25 am highest level since April 2018. The standard Straits Times index changed little on the day.
As a small island nation that relies heavily on trade, Singapore’s growth depends on a global recovery from the pandemic – but even then, challenges will continue as vaccines are rolled out locally.
Singapore sees unequal recovery in 2021 after worst-ever downturn
“The government has made every effort to support our workers and companies, to prevent job losses and business failures,” Prime Minister Lee Hsien Loong said in a New Year’s message on December 31. ‘We are looking forward to a setback in 2021, although recovery will be uneven, and activity is likely to remain below Covid-19 levels for some time. ”
What Bloomberg Economics says …
“Although activity is still increasing, we do not expect the positive growth to return to the second quarter of 2021. A complete overhaul of this regional center will require the normalization of global travel and trade, which we consider unlikely this year. “
– Tamara Mast Henderson, Asian Economist
To read the full note, click here
Despite the progress since the depth of the downturn, there are still major challenges.
“Further recovery in domestic demand is likely to be hampered by continued weakness in tourism, and the large labor market sluggish,” Citigroup Inc. economists Wei Zheng Kit and Kai Wei Ang wrote in a note. “We are also keeping a close eye on possible re-infection waves in the community, which could stop or even stop the reopening process.”
Compared to a year earlier, the economy shrank by 3.8% in the three months to December, its fourth consecutive quarter of contraction. The average estimate in a survey among economists was -4.7%.
In November, the ministry said it expected the economy to contract by 6% to 6.5% by 2020, before bouncing again to grow by 4% to 6% this year, as presumably easing travel restrictions and local security measures.
U-shaped recovery
“The recovery will be more U-shaped than V, and GDP will not return to pre-pandemic levels until early 2022,” Maybank Kim Eng Research Pte said. economists Chua Hak Bin and Ju Ye Lee wrote in a research note. “The weakening of border controls will occur at a sluggish pace, not against the warp, and probably later, when herd immunity is achieved in most developed economies.”
Other details of Monday’s release:
- Production expanded by 9.5% compared to the previous year, driven by electronics, biomedical manufacturing and precision engineering. The sector shrank by 2.6% compared to the previous three months
- Construction fell by 28.5% year-on-year, but by 34.4% over the previous quarter as more projects resumed
- The wholesale and retail and transport and storage sectors declined by 11% compared to a year earlier, only slightly improving from the decline in the third quarter amid subdued world trade and air travel
- Information and communication, finance and insurance and professional services sectors grew by 0.2% year-on-year compared to the contraction in the third quarter
- The projected GDP estimates are largely calculated from data in the first two months of the quarter. Next month, a fuller estimate will be released which will include performance by sectors, inflation, employment and productivity
– Assisted by Myungshin Cho and Michelle Jamrisko
(The market levels are updated in the fifth paragraph, the Bloomberg Economist quote adds in the text box, and the analysis quotes above are the point.)