English
Singapore GDP forecast cut to 6-6.5% for 2020; rebound expected next year: MTI
SINGAPORE’S official economic outlook has been cut again, as the gross domestic product (GDP) print for the third quarter was revised upwards by less than expected.
The Ministry of Trade and Industry (MTI) on Monday narrowed its forecast contraction to between 6 per cent and 6.5 per cent in 2020, from 5 per cent to 7 per cent before.
But the GDP is projected to grow by 4 per cent to 6 per cent in 2021, as the world’s major economies recover from the economic disruption of the Covid-19 pandemic and post a rebound from this year’s low base.
The economy shrank by 5.8 per cent year on year in the third quarter, beating an earlier estimate of a 7 per cent decline, on better-than-expected factory output in September. The latest print takes the contraction for the first nine months to 6.5 per cent.
Citing the improved growth outlook and likely easing of pandemic-related curbs, MTI said that “the Singapore economy is projected to return to growth in 2021”.
But it added that the looming recovery should be gradual “and will depend to a large extent on how the global economy performs and whether Singapore is able to continue to keep the domestic Covid-19 situation under control”.
With Singapore in the second phase of its three-stage reopening, the economy shrank by a more gradual 5.8 per cent year on year in the July-to-September period, moderating from the 13.3 per cent plunge seen in the three months prior.
This was slightly below the median 5.5 per cent decline tipped by private economists – who were cheered by double-digit industrial production growth in September – as services and construction fared more poorly than flash data had indicated.
To be sure, the manufacturing sector did not disappoint. It expanded by 10 per cent, up from advance estimates of 2 per cent growth and reversing an earlier 0.8 per cent dip.
Strong global demand for semiconductors and semiconductor equipment, as well as higher output in biomedical manufacturing, made up for the falls in transport engineering and general manufacturing production.
All the same, service industries shrank by 8.4 per cent year on year, slightly worse than the preliminary figure of 8 per cent contraction but a pick-up from the 13.4 per cent drop in the second quarter.
Declines ranged from 4.3 per cent in wholesale and retail trade to 29.6 per cent in the transport and storage industry, even as finance and insurance grew by 3.2 per cent and information and communications services by 2 per cent.
The plunge in construction was revised to 46.6 per cent in the third quarter, down from 44.7 per cent in flash data, after plummeting 60 per cent in the second quarter.
On a seasonally-adjusted, quarter-on-quarter basis, Singapore’s GDP added 9.2 per cent in the third quarter, after slipping 13.2 per cent in the second quarter.
“While growth is expected to rebound from the low base this year, our economic recovery is expected to be gradual, with GDP not likely to return to pre-Covid levels until the end of 2021,” Permanent Secretary for Trade and Industry Gabriel Lim told a briefing.
He also noted uncertainty over the global trajectory of the pandemic as well as the vaccine roll-out, which he said will affect the Singapore economy.
“Domestically, our economic recovery will also depend on whether we are able to keep the Covid-19 situation under control. MTI will continue to monitor developments closely,” Mr Lim added.
Source: https://www.businesstimes.com.sg/government-economy/singapore-gdp-forecast-cut-to-6-65-for-2020-rebound-expected-next-year-mti