Photographer: Wei Leng Tay / Bloomberg
Photographer: Wei Leng Tay / Bloomberg
Singapore’s economy continued its slow recovery from the worst fall in the country’s history, with pillars such as trade and tourism marked by the coronavirus pandemic.
Gross domestic product grew by 2.1% last quarter due to seasonality compared to the previous three months, according to advanced estimates from the Ministry of Trade and Industry released on Monday. Driven by quarterly gains in construction and services, the increase exceeded the average forecast of 1.3% in a survey of Bloomberg economists.
Throughout the year, the city-state economy shrank by 5.8%. While it is better than the 6% decline expected by economists, it is the worst show since independence more than half a century ago and the first annual contraction since 2001.
The performance is “definitely encouraging, as it has been better than expected for both the fourth quarter and the full year thanks to the upward revision in the third quarter,” said Selena Ling, head of research and treasure strategy of Oversea-Chinese Banking Corp. in Singapore. With vaccinations underway and a reduction in restrictions in late December, “we expect Singapore’s economy to continue to stabilize and recover its footing during the first half of 2021 to allow more economic green shoots to flourish.”
Forward Singapore
Singapore wants to recover from the worst slowdown since independence
Source: Singapore Department of Statistics, Ministry of Trade and Industry
The Singapore dollar rose 0.3% to US $ 1.3184 against the US dollar as of 10:25 a.m. highest level since April 2018. The Straits Times benchmark varied little on the day.
As a small island nation that is heavily dependent on trade, Singapore’s growth depends on the global recovery from the pandemic, but even then, the challenges will remain as vaccines are deployed locally.
Singapore sees an uneven recovery in 2021 after the worst decline
“The government has done everything possible to support our workers and businesses, to prevent massive job losses and business failures,” Prime Minister Lee Hsien Loong said in a December 31 message. . “We expect a rebound in 2021, although the recovery will be uneven and activity is likely to remain below pre-Covid-19 levels for some time to come.”
What Bloomberg Economics says …
“While activity continues to rise, we do not expect a return to positive growth until the second quarter of 2021. A full recovery of this regional center will require the normalization of world travel and trade, which we consider unlikely this year.”
– Tamara Mast Henderson, Asian economist
To read the full note, click here
Despite advances from the depths of the recession, important challenges remain.
“The recovery in domestic demand will probably be limited by the continuing weakness of tourism and the large influx of the labor market,” Economists at Citigroup Inc. Wei Zheng Kit and Kai Wei Ang wrote in a note. “We are also closely monitoring for possible renewed waves of infection in the community, which could stop or even reverse the reopening process.”
Compared to a year earlier, the economy shrank by 3.8% in the three months to December, the fourth consecutive quarter of contraction. The average estimate in a survey of economists was -4.7%.
In November, the ministry said he expected the economy to shrink from 6% to 6.5% in 2020, before growing again from 4% to 6% this year, as travel restrictions and local security measures are likely to be reduced.
U-shaped recovery
“The recovery will be more U-shaped than V-shaped, and GDP will return to pre-pandemic levels only in early 2022,” Maybank Kim Eng Research Pte said. economists Chua Hak Bin and Ju Ye Lee wrote in a research note. “The ease of border controls will be at a snail’s pace, not at warp speed, and probably later, when the herd’s immunity is achieved in most developed economies.”
Other details of Monday’s release:
- Manufacturing expanded by 9.5% compared to the previous year, driven by production in electronics, biomedical manufacturing and precision engineering. The sector contracted by 2.6% compared to the previous three months
- Construction fell by 28.5% year-on-year, but increased by 34.4% compared to the previous quarter, as more projects were resumed
- Wholesale and retail trade and transport and storage decreased by 11% over the previous year, only marginally improving the decline in the third quarter amid declining world trade and air travel.
- The information and communications, finance and insurance and professional services sectors grew by 0.2% year-on-year, compared with the contraction of 0.2% in the third quarter
- Advanced GDP estimates are largely calculated from data for the first two months of the quarter. A more complete estimate will be released next month that will include performance by sectors, inflation, employment and productivity
– With the assistance of Myungshin Cho and Michelle Jamrisko
(Update the market levels in the fifth paragraph, add the Bloomberg Economist quote to the text box, and the analyst quotes above the marked points.)