Singapore's economic system is ready to get better in 2021 because the contraction slows within the third quarter
A man wearing a mask on a stroll at Marina Bay Sands in Singapore's CBD in the background on April 1, 2020.
Suhaimi Abdullah | Getty Images
SINGAPORE – Singapore's economy contracted 5.8% year-over-year in the third quarter – up on original estimates, the country's Ministry of Commerce and Industry said on Monday.
The Southeast Asian country previously estimated that its economy would contract 7% year over year from July to September. Economic output in the third quarter was also better than the 13.3% year-over-year decline in the second quarter, the data showed.
Seasonally adjusted, the gross domestic product or GDP of Singapore rose in the three months to September compared to the previous quarter by 9.2%, a trend reversal compared to the decline of 13.2% in the second quarter, said the ministry.
"The improved performance of the Singapore economy is due to the gradual resumption of activity in the third quarter following the breaker implemented April 7 to June 1, 2020, as well as the recovery of activity in major economies during the quarter as they emerged from their locks emerged, "said the ministry.
The "breaker" refers to the country's partial lockdown measures aimed at containing the spread of the coronavirus. Singapore started lifting some restrictions since early June – allowing most activity to resume – but some measures remain in place, such as the mandatory wearing of masks and a ceiling on gatherings.
The recovery of the Singapore economy … will depend to a large extent on how the world economy develops and whether Singapore is able to keep the domestic COVID-19 situation under control.
Singapore's Ministry of Trade and Industry
This is how the various sectors in the city-state developed in the third quarter:
The goods manufacturing industry continued to outperform the service industry, led by manufacturing, which grew 10% year over year. However, construction activity declined 46.6% yoy – the third straight quarter of a decline. Insurance – a ray of hope – grew 3.2% y / y, while transportation and storage declined 29.6% compared with the worst performing service sector a year ago.
Return to growth in 2021
Singapore's economy is expected to contract between 6% and 6.5% in 2020 compared to a year ago, the ministry said. That's narrower than the previous official 5% to 7% forecast range for this year and would be the country's worst economic recession.
According to MTI, the Southeast Asian city-state is expected to grow again by 4% to 6% next year.
"The recovery in Singapore's economy in the coming year is expected to be gradual and will depend to a large extent on how the global economy develops and whether Singapore is able to keep the domestic COVID-19 situation under control." said.
But with the local Covid-19 outbreak largely under control, Singapore's economy is now "on the mend," said economists at DBS, the country's largest bank.
"Desperation and disappointment that dominated the global backdrop for much of the year are gradually giving way to hope and optimism of a recovery on the way to 2021," they wrote in a forecast report for Singapore last week.
DBS economists expect Singapore's economy to shrink 6% this year before recovering to 5.5% growth in 2021.