Photographer: Wei Leng Tay / Bloomberg
Photographer: Wei Leng Tay / Bloomberg
Singapore’s economy continued its slow recovery from the worst recession in the country’s history, with pillars such as trade and tourism hampered by the coronavirus pandemic.
Gross domestic product in the last quarter grew 2.1% on a seasonally adjusted basis compared to the previous three months, according to anticipated estimates from the Ministry of Commerce and Industry released on Monday. Driven by quarterly gains in construction and services, the increase surpassed the median forecast of 1.3% in a Bloomberg survey of economists.
Year-to-date, the city-state’s economy shrank 5.8%. Although better than the 6% decline 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, as it came out better than expected for the fourth quarter and also for the whole year, thanks to the upward revision of the third quarter,” said Selena Ling, head of research and treasury strategy at Oversea-Chinese Banking Corp. in Singapore. With vaccinations underway and a further reduction in restrictions at the end of December, “we expect to see Singapore’s economy continue to stabilize and regain its balance in the first half of 2021 to allow more economic green shoots to flourish.”
Forward Singapore
Singapore seems to recover from the worst recession since independence
Source: Singapore Department of Statistics, Ministry of Commerce and Industry
The Singapore dollar rose 0.3% to S $ 1.3184 against the US dollar as of 10:25, its highest level since April 2018. The benchmark 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 so, the challenges will remain as vaccines are launched locally.
Singapore sees uneven recovery in 2021, after the worst recession of all time
“The government has done everything to support our workers and companies, to prevent massive job losses and business failures,” said Prime Minister Lee Hsien Loong in a New Year message on December 31. “We expect a recovery in 2021, although the recovery is irregular and activity is likely to remain below pre-Covid-19 levels for some time. “
What the Bloomberg economy says …
“Although activity continues to recover, we do not expect a positive return to growth until the second quarter of 2021. The full recovery of this regional center will require the normalization of global travel and trade, which we consider unlikely this year.”
– Tamara Mast Henderson, economist at Asean
To read the full note, click here
Despite progress since the beginning of the recession, significant challenges remain.
“The further recovery in domestic demand would likely be constrained by the continued weakness in tourism and the large slack in the labor market.” Citigroup Inc. economists Wei Zheng Kit and Kai Wei Ang wrote in a note. “We also keep an eye out for possible waves of renewed infection in the community, which can interrupt or even reverse the reopening process.”
Compared to the previous year, the economy shrank 3.8% in the three months to December, its fourth consecutive quarter of contraction. The median of estimates in a survey of economists was -4.7%.
In November, the ministry said The economy is expected to contract 6% to 6.5% in 2020, before growing 4% to 6% again this year, as travel restrictions and local security measures are presumably eased.
U Recovery
“The recovery will be more U-shaped than V-shaped, with GDP returning to pre-pandemic levels only in early 2022,” Maybank Kim Eng Research Pte. economists Chua Hak Bin and Ju Ye Lee wrote in a research note. “The easing of border controls will be at a snail’s pace, not at warp speed, and probably later, when herd immunity is achieved in the most developed economies.
Other details of Monday’s launch:
- Manufacturing grew 9.5% over the same period last year, driven by production in the electronics, biomedical manufacturing and precision engineering sectors. The sector contracted 2.6% over the previous three months
- Construction fell 28.5% yoy, but grew 34.4% over the previous quarter as more projects were resumed
- The wholesale and retail and transportation and storage sectors fell 11% from the previous year, only slightly improved from the third quarter’s decline amid moderate global trade and air travel
- The information and communications, finance and insurance and professional services sectors grew 0.2% year-on-year, compared to the 0.2% contraction in the third quarter
- The anticipated GDP estimates are calculated largely from data for the first two months of the quarter. A more complete estimate will be released next month and will include performance by sectors, inflation, employment and productivity
– With the help of Myungshin Cho and Michelle Jamrisko
(Updates market levels in the fifth paragraph, adds the quote from the Bloomberg Economist in the text box, the quotes from analysts above the markers.)