Based on the advance estimates from Ministry of Trade and Industry (MTI) for the third quarter of 2020, Singapore’s gross domestic product (GDP) contracted by 7 per cent compared to the same quarter last year.
However, this is an improvement from the 13.3 per cent contraction in the second quarter, the Ministry said on Wednesday (14 October).
“The improved performance of the Singapore economy in the third quarter came on the back of the phased re-opening of the economy following the Circuit Breaker that was implemented between 7 April and 1 June 2020,” MTI’s statement read.
Earlier it was reported that the trade-reliant economy reduced by 13.2 per cent in the second quarter of this year, as compared to the same period last year. This percentage is worse that the initial estimation of 12.6 per cent.
On a quarter-on-quarter basis, the economy shrunk by 13.1 per cent in the second quarter of 2020, due to the circuit breaker measures as well as weak external demand amidst a global economic downturn caused by the COVID-19 pandemic.
In Q3, the Singapore’s economy has rebounded from the 13.2 per cent contraction in the preceding quarter and expanded by 7.9 per cent on a quarter-on-quarter seasonally-adjusted basis.
The statement also revealed that manufacturing sector grew by 2.0 per cent on a year-on-year basis in the third quarter, a reversal from the 0.8 per cent contraction in the previous quarter.
While on a quarter-on-quarter seasonally-adjusted basis, the manufacturing sector expanded by 3.9 per cent, a turnaround from the 9.1 per cent contraction in the second quarter.
“Growth of the sector was supported by output expansions in the electronics and precision engineering clusters, which were in turn driven by robust global demand for semiconductors and semiconductor manufacturing equipment,” MTI said.
As for the construction sector, it shrank by 44.7 per cent in the third quarter compared to the same period last year, extending the 59.9 per cent decline in the previous quarter.
To this, MTI explained that the construction output in the third quarter remained weak on account of the slow resumption of construction activities due to the need for construction firms to implement safe management measures for a safe restart.
The construction sector grew by 38.7 per cent on a quarter-on-quarter seasonally-adjusted basis, a rebound from the sharp contraction of 59.4 per cent recorded in the second quarter.
Not only construction sector, the services producing industries also contracted by 8.0 per cent on a year-on-year basis in the third quarter.
MTI added in its statement that this is an improvement from the 13.6 per cent decline in the previous quarter.
On a quarter-on-quarter seasonally-adjusted basis, the services producing industries expanded by 6.8 per cent, a reversal from the 11.2 per cent decline seen in the second quarter.
“Within services, aviation- and tourism-related sectors like air transport and accommodation continued to see significant contractions, as global travel restrictions and sluggish travel demand brought air travel and visitor arrivals to a near complete standstill,” said MTI.
It also noted that other trade-related services sectors, such as wholesale trade, were also weighed down by weak external demand.
In view of the reopening phase of economy, consumer-facing sectors such as retail and food services saw an improvement in performance, however, MTI noted that the sectors remained in contraction, “with sales volumes coming in below year-ago levels due to weak consumer confidence and capacity constraints resulting from safe distancing measures.”
“However, the finance & insurance and information & communications sectors recorded steady growth during the quarter,” it added.
Recovery will continue to be slow and uneven across sectors, says Chan Chun Sing
In a Facebook post on Wednesday, Trade and Industry Minister Chan Chun Sing noted that the economy recovery “will continue to be slow and uneven across sectors” while Singapore expect the economic situation to improve.
“In particular, aviation- and tourism-related sectors are expected to see a protracted downturn due to travel restrictions and sluggish travel demand, even as sectors such as manufacturing, information & communications and finance & insurance continue to post steady growth,” Mr Chan wrote.
Noting that there is also significant uncertainty in the global economy, he cautioned that the “downturn in the global economy could be more severe and prolonged than expected” if there is a major resurgence in infections globally that leads to a re-imposition of strict measures such as nationwide lockdowns and movement restrictions, or a sharp retraction in consumer and business demand.
“This will weigh on Singapore’s economic recovery,” he noted.
Mr Chan also stated that the Government has rolled out the support measures over the last few months to cushion the impact of COVID-19.
However, he stressed that it is critical that the business and workers take the necessary steps to adapt and evolve to the changing economy.
“There is no returning to a pre-COVID world and we must all do what it takes to stay relevant and competitive today so that we can position ourselves for a strong recovery,” he noted.