SINGAPORE: Singapore’s economy is expected to shrink by 6% to 6.5% this year, the Ministry of Trade and Industry (MTI) said on Monday (Nov. 23) in another revision of its outlook for 2020 after the data growth confirmed a contraction than expected in the third quarter.
Its previous estimate, announced in August, predicted the economy to contract from 5% to 7%.
Policymakers also offered for the first time a snapshot of their economic forecast for 2021 – a recovery into positive growth territory, with the economy expected to grow between 4% and 6% next year.
For the third quarter, Singapore’s gross domestic product (GDP) contracted 5.8% on an annual basis, more than halving a record 13.3% drop in the previous quarter when the COVID ‘breaker’ -19 was in place.
Compared to seasonally adjusted quarterly rates, the economy rebounded 9.2% after declining 13.2% in the previous three months.
The double digits for the third quarter were better than the government’s anticipated estimates of a 7% year-over-year contraction and a 7.9% quarter-over-quarter expansion.
In addition to a gradual reopening of Singapore’s economy in June which allowed economic activity to pick up, the improvement in GDP performance was accompanied by a similar rebound in activity in major economies during the exit quarter. of their lockdowns, MTI said.
But he noted that uncertainties remained as the global economic situation remained subdued.
“While some economies like China are expected to experience a sustained recovery for the remainder of 2020, as their national COVID-19 epidemics remain under control, others like the United States and the euro area are experiencing a resurgence in infections,” which could hamper their recovery due to the restrictions. reimposed to slow the spread of the virus, ”he said.
Domestically, the pandemic continues to have an uneven impact on various sectors, with trade-related service sectors likely to remain weakened.
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UPCOMING GRADUAL RECOVERY
The recovery of Singapore’s economy in the coming year is expected to be “gradual,” MTI said.
“(This) will depend to a large extent on the performance of the global economy and Singapore’s ability to continue to control the domestic COVID-19 situation,” he added.
Globally, major advanced and developing economies are expected to recover from massive economic disruption caused by COVID-19 and see their GDP rebound from baseline this year. But it is expected to be slow and uneven across economies, with many economies likely not returning to pre-COVID-19 levels before the end of the year.
Risks persist, he said, citing the periodic resurgence of infections around the world, the reimposition of lockdowns, the protracted nature of the economic recovery in many countries as well as geopolitical uncertainties.
Domestically, the trade-related service sectors are expected to benefit from the recovery in external demand.
At the same time, the manufacturing sector is likely to continue to grow, stimulated by the electronics and precision engineering clusters; while the information and communications, as well as finance and insurance sectors are expected to remain healthy.
Hard-hit sectors, such as aviation and tourism, will experience a gradual recovery in air passenger volumes and visitor arrivals.
Likewise, sectors in contact with consumers, such as retail trade and restaurant services, are expected to benefit from the pick-up in visitor arrivals, as well as improved consumer sentiment amid better market conditions. labor market.
“However, economic activity in these sectors is unlikely to return to pre-COVID-19 levels, even by the end of 2021,” MTI said.
Meanwhile, the construction sector is expected to recover from its low base this year, although construction activity will continue to be held back by the implementation of sound management measures.
“Overall, given improved growth prospects for major external economies, as well as further easing of global travel restrictions and national public health measures that are expected in the year to Come, Singapore’s economy is expected to resume growth in 2021, ”MTI said.
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