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SINGAPORE: Singapore’s economy is expected to contract between 6 percent and 6.5 percent this year, the Ministry of Trade and Industry (MTI) said on Monday (Nov 23) in another revision of its outlook for 2020 after growth data confirmed a smaller than expected contraction in the third quarter.
His previous estimate, announced in August, was that the economy would contract between 5% and 7%.
Policymakers also offered for the first time a glimpse of their economic forecast for 2021 – a recovery into positive growth territory, with the economy forecast to expand by 4-6% next year.
For the third quarter, Singapore’s gross domestic product (GDP) contracted by 5.8% year-on-year, more than half from a record drop of 13.3% in the previous quarter when the COVID-19 “breaker” was on its place.
Compared to a seasonally adjusted quarter-on-quarter basis, the economy recovered 9.2% after a 13.2% drop in the previous three months.
Both figures for the third quarter were better than the government’s anticipated estimates of a 7% year-on-year contraction and a 7.9% quarter-on-quarter expansion.
Aside from a gradual reopening of Singapore’s economy in June that allowed for a recovery in economic activities, improved GDP performance was accompanied by a similar upturn in activities in the major economies during the quarter when they came out of their lockdowns, MTI said. .
But he noted that uncertainties persist and that the global economic situation remains moderate.
“While some economies like China are expected to see a sustained recovery through the remainder of 2020 as their domestic COVID-19 outbreaks remain under control, others like the US and the Eurozone are experiencing a resurgence of infections, which That can slow down your recovery as restrictions are imposed. it was imposed again to stop the spread of the virus, “he said.
At the national level, the pandemic continues to have an uneven impact across various sectors, and trade-related services sectors are likely to remain weak.
READ: IN FOCUS: After COVID-19, where is Singapore’s workforce and economy headed?
GRADUAL RECOVERY IN THE FUTURE
The recovery of Singapore’s economy in the coming year is expected to be “gradual,” the MTI said.
“(It) will depend largely on how the world economy performs and whether Singapore can continue to keep the national COVID-19 situation in check,” he added.
Globally, major advanced and developing economies are expected to recover from the massive economic shocks caused by COVID-19 and see their GDP rebound from this year’s low base. But this is expected to be slow and uneven across economies, and many economies are unlikely to return to pre-COVID-19 levels until the end of the year.
Risks persist, he said, citing the periodic resurgence of infections around the world, the re-imposition of lockdowns, the protracted nature of the economic recovery in many countries, as well as geopolitical uncertainties.
At the national level, trade-related services sectors are expected to benefit from the rebound in external demand.
At the same time, the manufacturing sector is likely to continue to expand, driven by the electronics and precision engineering groups; while the information and communications and finance and insurance sectors are expected to remain healthy.
The most affected sectors, such as aviation and tourism, will experience a gradual recovery in air passenger volumes and visitor arrivals.
Similarly, consumer-oriented sectors such as retail and food services are expected to benefit from the recovery in visitor arrivals, as well as an improvement in consumer confidence amid better market conditions. working market.
“However, economic activity in these sectors is not likely to return to pre-COVID-19 levels even by the end of 2021,” the MTI said.
Meanwhile, the construction sector is expected to recover from this year’s low base, although construction activity will continue to be held back by the implementation of safe management measures.
“Ultimately, given the better growth prospects for key external economies, as well as further relaxation of global travel restrictions and national public health measures expected in the coming year, the economy of Singapore grows again in 2021 “. MTI said.
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