Singapore Continues Slow Recovery From Worst Economic Slump

Singapore’s economy continued its slow recovery from the worst slump in the country’s history, with mainstays such as trade and tourism hammered by the coronavirus pandemic.

Gross domestic product last quarter grew 2.1% on a seasonally adjusted basis compared to the previous three months, according to advance estimates from the Ministry of Trade and Industry released Monday. That beat the median forecast of 1.3% in a Bloomberg survey of economists.

For the full year, the city-state’s economy shrank 5.8%. While better than the 6% decline expected by economists, it’s the worst showing since independence more than a half-century ago and the first annual contraction since 2001.

The performance is “definitely encouraging, in that it came in better than expected for both the fourth quarter and also full year thanks to the third quarter’s upward revision,” said Selena Ling, head of treasury research and strategy atOversea-Chinese Banking Corp. in Singapore. With vaccinations now underway and a further easing of restrictions in late December, “hopefully we’ll see the Singapore economy continue to stabilize and regain its footing in the first half of 2021 to allow more economic green shoots to bloom.”

The Singapore dollar was up 0.11% at S$1.3204 to the U.S. dollar as of 8:15 a.m. local time.

As a small island nation that relies heavily on trade, Singapore’s growth depends on a global recovery from the pandemic — but even then, challenges will remain as vaccines are rolled out locally.

Singapore Sees Uneven Recovery in 2021 After Worst-Ever Downturn

“The government has gone all out to support our workers and companies, to prevent massive job losses and business failures,” Prime Minister Lee Hsien Loong said in a New Year’s message on Dec. 31. “We look forward to a rebound in 2021, although the recovery will be uneven, and activity is likely to remain below pre-Covid-19 levels for some time.”

Compared to a year earlier, the economy shrank 3.8% in the three months through December, its fourth straight quarter of contraction. The median estimate in a survey of economists was -4.7%.

In November, the ministry saidit expected the economy to contract 6% to 6.5% in 2020, before bouncing back to grow 4% to 6% this year as travel restrictions and local safety measures presumably are eased.

Other details from Monday’s release:

  • Manufacturing expanded 9.5% compared to the year-earlier period, driven by output in the electronics, biomedical manufacturing and precision engineering. The sector contracted 2.6% compared to the prior three months
  • Construction was down 28.5% year-on-year, but up 34.4% from the previous quarter as more projects resumed
  • The wholesale & retail trade and transportation & storage sectors declined 11% from a year earlier, only marginally improved from the third quarter’s decline amid subdued global trade and air travel
  • Information & communications, finance & insurance and professional services sectors grew 0.2% year-on-year, compared to the third quarter’s 0.2% contraction
  • The advance GDP estimates are computed largely from data in the first two months of the quarter. A fuller estimate will be released next month that will include performance by sectors, inflation, employment and productivity

— With assistance by Myungshin Cho, and Michelle Jamrisko

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