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Typically, Singapore’s small economy is hit first by external shocks before the ripples spread through the region.
SINGAPORE: Singapore’s economy suffered its worst annual contraction in 2020 as the coronavirus pandemic hit the city’s vital commerce and tourism sectors, official data showed on Monday.
But the 5.8% drop was not as bad as feared (official forecasts had predicted a drop of up to 6.5%), as economic activity recovered with the easing of restrictions.
The financial center plunged into its first recession since the 2008 global financial crisis in the second quarter, when the government closed most workplaces as part of drastic measures to contain infections.
Singapore, one of the most open economies in the world, is considered a benchmark in the health of world trade, and the dramatic deterioration of its economy has sounded alarms.
But the brakes were relaxed in the second half of the year and key sectors of the economy, such as manufacturing, have started to recover.
In the fourth quarter, the economy contracted 3.8% year-on-year, less than expected, according to preliminary growth data published by the Ministry of Commerce.
Song Seng Wun, a regional economist at CIMB Private Banking, told AFP that the contraction was not as strong as feared due to strong exports of some goods.
Song said he expects a “rebound of around 6%” this year.
“We see that companies continue to benefit from more loosening of restrictions and higher global demand for (microchips) and medicines,” he said.
Typically, Singapore’s small economy is hit first by external shocks before the ripples sweep across the region. However, it also usually recovers quickly from any recession.
The city-state won praise for keeping the pandemic under control in the early stages only to have serious outbreaks later appear in overcrowded dormitories housing poorly paid migrant workers.
But its outbreak has slowed noticeably in recent weeks, with only a few cases being reported a day.
Authorities began a vaccination campaign against the coronavirus last week, making it one of the first Asian nations to implement vaccines.
