Singapore’s GDP contracts 5.4% in 2020, forecast for 2021 maintained


SINGAPORE – Singapore’s economy contracted by 5.4 per cent in 2020, a reversal from the 1.3 per cent growth in 2019, said the republic’s Ministry of Trade and Industry (MTI).

For the fourth quarter of 2020, Singapore’s economy contracted by 2.4 per cent on a year-on-year basis, an improvement from the 5.8 per cent contraction in the preceding quarter, the MTI said in a statement on Monday.

It also maintains the Gross Domestic Product (GDP) growth forecast for 2021 at 4.0 to 6.0 per cent.

On sectoral basis, the ministry said the manufacturing sector expanded by 7.3 per cent, a turnaround from the 1.5 per cent contraction in 2019, supported by robust expansions in the biomedical manufacturing, electronics and precision engineering clusters.

The construction sector, meanwhile, shrank by 35.9 per cent, a sharp retraction from the 1.6 per cent growth posted in 2019, weighed down by weakness in both public sector and private sector construction works.

The services producing industries contracted as well by 6.9 per cent, reversing the 2.0 per cent growth recorded in 2019.

The MTI said most services sectors saw a full-year contraction due to the widespread economic impact of the COVID-19 pandemic.

Key exceptions were the finance & insurance and information & communications sectors, which expanded by 5.0 per cent and 2.1 per cent, respectively, it said.

As for the outlook for this year, the MTI said there has been further progress in COVID-19 vaccine development and deployment, with several approved vaccines being rolled out in many economies around the world.

Although the speed of vaccine deployment varies, advanced economies like the US and Eurozone are likely to reach population immunity by the second half of this year, which should in turn spur their economic recoveries.

On the other hand, the growth prospects for regional economies such as Malaysia and Indonesia have weakened due to the recent resurgence in infections, which has necessitated the re-imposition of lockdowns and restrictions.

On balance, the ministry said as the positive developments in the key external economies broadly offset the negative ones, Singapore’s external demand outlook remains largely similar compared to three months ago.

Domestically, MTI said Singapore’s COVID-19 situation remains under control and the vaccination programme is also underway.

However, the pace of border re-opening has slowed amid the global surge in COVID-19 cases and the emergence of more contagious strains of the virus, it said.

Taking into account the developments in the global and domestic economic environment, the MTI said Singapore’s economy is expected to see a gradual recovery over the course of the year, although the outlook remains uneven across sectors.