Photographer: Wei Leng Tay / Bloomberg
Photographer: Wei Leng Tay / Bloomberg
Singapore’s economy has continued its slow recovery from the worst crisis in the country’s history, with pillars such as trade and tourism hit by the coronavirus pandemic.
Gross domestic product in the last quarter rose 2.1% on a seasonally adjusted basis compared to the last three months, according to estimates by the Ministry of Trade and Industry, released on Monday. Driven by quarterly gains in construction and services, growth exceeded average forecasts by 1.3% in a Bloomberg survey of economists.
For the whole year, the economy of the city-state decreased by 5.8%. Although it is better than the 6% drop expected by economists, it is the worst manifestation of independence more than half a century ago and the first annual contraction since 2001.
The performance is “certainly encouraging, in that it came out better than expected for both the fourth quarter and the full year, thanks to the upward revision of the third quarter,” said Selena Ling, head of research and strategy. of the treasury at Oversea-Chinese Banking Corp. in Singapore. Given the ongoing vaccinations and a further reduction in restrictions at the end of December, “we hope that we will see Singapore’s economy continue to stabilize and regain its position in the first half of 2021 to allow more economic green shoots ”.
Next Singapore
Singapore seems to be recovering from the worst independence recession
Source: Singapore Department of Statistics, Ministry of Trade and Industry
The Singapore dollar rose 0.3% to $ 1.3184 against the US dollar since 10:25 a.m. the highest level since April 2018. The Straits Times Index was slightly changed on that day.
As a small island nation that relies heavily on trade, Singapore’s growth depends on a global pandemic recovery – but even then, the challenges will remain as vaccines are launched locally.
Singapore sees an uneven recovery in 2021 after the worst recession
“The government has made every effort to support our workers and companies, to prevent massive job losses and business failures,” Prime Minister Lee Hsien Loong said in a December 31 New Year message. “We look forward to a return in 2021, although the recovery will be uneven, and activity is likely to remain below pre-Covid-19 levels for some time. “
What Bloomberg Economics says …
“Although activity continues to grow, we do not expect a return to positive growth until the second quarter of 2021. A full recovery for this regional hub 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 made since the depths of the recession, significant challenges remain.
“The further recovery in domestic demand would probably be constrained by the continuing weakness of tourism and the large weakening of the labor market”, Citigroup Economists Inc. Wei Zheng Kit and Kai Wei Ang wrote in a note. “We are also closely monitoring possible waves of renewed infection in the community, which could stop or even reverse the reopening process.”
Compared to a year earlier, the economy fell by 3.8% in the three months to December, the fourth consecutive quarter of contraction. The median estimate in a survey conducted by economists was -4.7%.
In November, the ministry said the economy was expected to contract from 6% to 6.5% in 2020, before rising again from 4% to 6% this year, as travel restrictions and local security measures are likely to ease.
U-shaped 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. “Easing border controls will be at a snail’s pace, not at a warp rate and probably later, when the immunity of the herd is reached in most developed economies.”
Other details from Monday’s launch:
- Production expanded by 9.5% compared to the previous year, determined by electronics production, biomedical production and precision engineering. The sector contracted by 2.6% compared to the previous three months
- Construction decreased by 28.5% compared to the previous year, but increased by 34.4% compared to the previous quarter, as more projects were resumed
- The wholesale and retail trade and transport and storage sectors fell by 11% from a year earlier, improving only marginally from the decline in the third quarter, amid reduced global trade and air travel.
- The information and communications, finance and insurance and professional services sectors increased by 0.2% compared to the previous year, compared to the contraction of 0.2% in the third quarter
- Estimates of GDP are largely calculated from data for the first two months of the quarter. A more complete estimate will be released next month, which will include sector performance, inflation, employment and productivity.
– With the assistance of Myungshin Cho and Michelle Jamrisko
(Update market levels in the fifth paragraph, adds the Bloomberg Economist quote in the text box, the analyst quotes over the bullet points.)