Singapore’s economy contracted by 5.8 per cent in a pandemic-hit 2020, according to preliminary data released by the Ministry of Trade and Industry (MTI) on Monday (4 January).
Despite the shrinking of the economy, however, most industries saw some improvements in the last quarter of the year after COVID-19 restrictions began to ease.
The Republic was badly affected by the pandemic due to movement restrictions and border closures. Industries such as construction, aviation and tourism took the biggest hit.
The Government predicted that the country’s gross domestic product (GDP) would shrink between 6 per cent and 6.5 per cent in 2020.
MTI’s latest data also showed that GDP contracted 3.8 per cent on a year-on-year basis in the last three months of 2020, which is an improvement from the 5.6 per cent reduction in the third quarter, given that more COVID-19 restrictions on economic activity were lifted.
On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 2.1 per cent, following the 9.5 per cent expansion in Q3.
The GDP saw strong growth in Q3 due to the resumption of activities following the circuit breaker period spanning from 7 April to 1 June to stem the spread of COVID-19 in Singapore.
Additionally, major economies also saw a rebound in activity during this quarter, as they came out from their own lockdown, aiding in stronger growth in the third quarter of 2020, MTI said.
The Government has also started a vaccination programme, starting with healthcare workers. S$100 billion will be set aside to provide virus-related relief to households and businesses.
MTI also noted the country will return to growth this year but also warned that the process would be gradual.
Last month, MTI revealed in its maiden forecast for 2021 that the economy may expand by 4 per cent to 6 per cent.
Performance of each sector
The manufacturing industry continued to perform well, as it grew by 9.5 per cent in Q4, and 7.1 per cent for the entire year.
The growth was mainly contributed due to the expansion in the electronics, biomedical and precision engineering clusters, which offset declines in the transport engineering and general manufacturing clusters, MTI said.
However, in terms of a quarter-to-quarter seasonally adjusted basis, the industry shrank by 2.6 per cent, after growing by 12.6 per cent in the third quarter.
As for the services sector, it contracted by 6.8 per cent in the last quarter of 2020 and 7.8 per cent for the whole year.
On a quarter-on-quarter seasonally adjusted basis, it expanded by 2.4 per cent in Q4, softening the 6 per cent increase it saw in the third quarter.
Other industries like communications, finance, insurance and professional services cluster performed better than hospitality- and administrative-related industries.
Unfortunately, the construction sector became the worst-performing sector for the year as it contracted by 33.7 per cent for the entire 2020.
The building industry, however, appeared to be getting better as the contraction dropped from 46.3 per cent in Q3 to 28.5 per cent in Q4.
On a quarter-on-quarter seasonally adjusted basis, the sector expanded for the second quarter in a row by 34.4 per cent in the fourth quarter, on top of the 39 per cent growth in the third quarter.