Singapore economy expands 1.3% in Q1 2021

by BERNAMA / pic by AFP

SINGAPORE – The Singapore economy expanded by 1.3 per cent on a year-on-year basis in the first quarter of 2021, a reversal from the 2.4 per cent contraction in the previous quarter, the republic’s Ministry of Trade and Industry (MTI) said.

In a report released today, the ministry said on a quarter-on-quarter seasonally-adjusted basis, the economy grew by 3.1 per cent, extending the 3.8 per cent expansion in the fourth quarter of last year.

Considering the larger-than-usual degree of uncertainty over the course of the pandemic globally, as well as Singapore’s domestic situation, the MTI said it has decided to maintain the gross domestic product (GDP)  growth forecast for 2021 at 4.0 to 6.0 per cent for now.

“A review of the forecast will be undertaken in August when there is another quarter of data, as well as greater clarity over the global and domestic economic situations,” it said.

As for economic performance in the first quarter, the manufacturing sector expanded by 10.7 per cent year-on-year, slightly faster than the 10.3 per cent growth in the previous quarter.

“Growth was due to output expansions in the electronics, precision engineering and chemicals clusters, which outweighed output declines in the transport engineering, general manufacturing and biomedical manufacturing clusters,” it said.

It was then followed by the wholesale trade sector which expanded by 3.5 per cent year-on-year; the retail trade sector by 1.4 per cent; the accommodation sector by 19.0 per cent; the information & communications sector accelerated to 6.4 per cent; and the finance & insurance sector by 4.7 per cent.

The other services industries also expanded by 0.5 per cent year-on-year, a turnaround from the 5.7 per cent contraction in the fourth quarter.

Meanwhile, the construction sector contracted by 22.7 per cent year-on-year, improving from the 27.4 per cent contraction in the previous quarter.

“The performance of the sector was weighed down by declines in both public and private sector construction works,” the MTI said.

The transportation & storage shrank by 16.5 per cent; followed by the food & beverage services sector by 9.4 per cent; the real estate sector by 3.9 per cent; the professional services by 4.5 per cent; and the administrative & support services sector by 12.9 per cent.

As for the economic outlook for this year, the ministry said while it is possible that the Singapore economy will outperform the 4.0 to 6.0 per cent growth forecast for 2021, there are also significant downside risks.

“The most important is the trajectory of the COVID-19 pandemic,” it said.

The MTI said countries are experiencing recurring waves of infections, with the emergence of more transmissible strains of the virus, the easing of safe management restrictions, and delays in vaccinating populations.

“These resurgences, as well as the countries’ public health responses to them, will inevitably affect their economic growth,” it said.

Given the experience of the last 15 months, the MTI said there is hope that even if outbreaks flare up again, countries will be able to avoid repeated blanket lockdowns and their high economic cost, but this is far from certain.

“As these countries include some of our major economic partners in our region, the uncertainty in their outlook also affects Singapore,” the ministry said.

The MTI said domestically, while COVID-19 is generally well under control, with the republic making good progress in vaccinating the entire population, there remain significant risks and uncertainties in its own COVID-19 situation.

“These non-economic risks can have a major impact on our GDP growth this year,” it said.