Singapore’s economy is now expected to shrink between 6 per cent and 6.5 per cent this year, as the country’s gross domestic product (GDP) print for the third quarter contracted much less than expected, said the Ministry of Trade and Industry (MTI) on Monday (23 Nov).
The city-state’s GDP contracted by 5.8 per cent on a year-on-year basis in the third quarter, beating its initial estimates of a 7 per cent decline, it noted.
On a quarter-on-quarter seasonally adjusted basis, the economy grew by 9.2 per cent in the third quarter, after a 13.2 per cent contraction in the second quarter, as reported by Channels News Asia.
MTI said that the improved GDP performance was due to the gradual reopening of the nation’s economy in June, and the rebound in activities in major economies during the quarter as they emerged.
With the gradual resumption of economic activities and improved growth outlook, Singapore’s economy is expected to expand by 4.0 per cent to 6.0 per cent next year.
“While growth is expected to rebound from the low base this year, our economic recovery is expected to be gradual, with GDP not likely to return to pre-COVID levels until the end of 2021,” said MTI’s Permanent Secretary Gabriel Lim in a media briefing.
“Furthermore, there remains uncertainty over how the COVID-19 situation will evolve globally in the year ahead, which will depend in part on the progress in vaccine development, production and distribution,” he added.
MTI said that trade-related services sectors are projected to benefit from the pick-up in external demand. Similarly, the manufacturing sector may continue to expand with growth in the electronics and precision engineering clusters.
Additionally, finance and insurance sectors are expected to remain healthy, while the aviation and tourism sectors will see a gradual recovery in air passenger volumes and visitor arrivals.
The Ministry also noted that consumer-facing sectors are expected to see a recovery in visitor arrivals and improvement in consumer sentiments, but it stressed that economic activity in these sectors “is not likely to return to pre-COVID-19 levels even by end-2021”.
MTI added that the construction sector is also projected to recover from a low base this year, despite the implementation of safe management measures continues to dampen construction activities.