Singapore’s Ministry of Trade and Industry (MTI) has revised its growth forecast range for the year to 6% to 7%, from its previous 4% to 6% range.
The move follows the pick up in vaccination rates - particularly in key advanced economies such as the US and Eurozone - which has allowed them to press on with their re-opening plans, says MTI.
These plans are notwithstanding an uptick in the Covid-19 cases, which have continued to rise globally due to the spread of the highly transmissible Delta variant.
The city state’s 2Q2021 GDP - which covers the period between April and June – expanded by 14.7%, faster than the 1.5% rate recorded in the previous quarter.
MTI attributes the strong growth to the low base in the same period last year, when GDP fell by 13.3% due to the circuit breaker measures as well as a sharp dip in external demand.
In absolute terms, GDP remained 0.6% below its pre-pandemic level in 2Q2019.
A sharp push came from the 106.2% expansion logged by the construction sector thanks to an increase in works from both the public and private sectors and the low base effects since most domestic construction activities were suspended in the previous year.
This performance is also a sharp turnaround from the 23.2% contraction in the previous quarter.
In absolute terms, the value-add of the sector remained 29% below it pre-pandemic level in 2Q2019.
Similarly, the retail trade sector was up 50.7%, a significant jump from the 1.6% growth in the previous quarter.
This was supported by higher motor vehicle and non-motor vehicle sales volumes, largely due to the low base in the previous year.
Still, in absolute terms, the value-add of the sector remained 12% below its pre-pandemic level.
The manufacturing sector grew by 17.7%, extending its 11.4% growth recorded in the previous quarter. This follows expansions across all clusters, with transport engineering and precision engineering seeing the largest increases in output.
In absolute value-add terms, the sector was however 29% below its pre-pandemic level in 2Q2019.
Meanwhile, the food and beverages services saw growth jump by 36.7% y-o-y, reversing from the previous quarter’s 9.2% contraction. This was supported by greater sales volumes at restaurants, cafes, food courts & other eating places and fast food joints, due to last year’s low base.
Food caterers however, continued to be adversely affected by restrictions on large-scale events and gatherings.
Thus, on the whole, the value-add of the sector remained 26% below its pre-Covid level.
Meanwhile, the transport and storage sector grew by 20.9%, logging a turnaround from the previous quarter’s 15.8% contraction.
Within the sector, the air transport and land transport segments expanded strongly from a low base in 2Q2020, while the water transport segment grew in tandem with an increase in total sea cargo handled and container throughput.
Overall, the sector’s value-add remained 24% lower than its pre-Covid level.
Over at the real estate sector, growth was up by 25.8%, a reversal from the previous quarter’s 3.1% contraction.
While this comes on the back of the previous year’s low base, it is still 7.4% lower than pre-pandemic levels in terms of value-add.
In line with this, the accommodation sector expanded by 13.2%, easing with the previous month’s 16.3% growth.
The value-add for the sector remained 27% lower than pre-pandemic level as growth was supported by government and domestic tourism demand despite the weak international visitor arrivals.
Several other sectors such as information & communications, finance & insurance and professional services recorded expansions in 2Q2021.
Growth from the information & communications sector was by 9.6%, a step-up from the previous quarter’s 6.8% rise that came from robust enterprise and consumer demand for digital solutions & services, and games & software publishing activities.
The finance & insurance sector grew by 9.1% y-o-y, higher than the previous quarter’s 5.7% growth rate. Strong support came from the banking segment which grew due to the continued increase in net fees and commissions and interest income from loans.
The insurance segment likewise expanded strongly, reflecting the sustained demand for life insurance products.
The growth streak extended to the professional services sector which expanded by 9.4% - a reversal from its 4.5% contraction in the previous quarter.
This follows growth in segments like architectural & engineering, technical testing & analysis and other professional, scientific & technical services segments, due to the low base in 2Q2020 during which most domestic construction activities were suspended and workplace restrictions were in place.
Meanwhile, the other services industries segment expanded by 15.8% y-o-y, a sharp improvement from the 0.5% growth posted in 1Q2021.
This comes as the arts, entertainment & recreation and health & social services segments had some activity – a complete reversal from the status in 2Q2020. However, the sector remained 5.0% below its pre-Covid level.
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The administrative & support services sector contracted by 1.3% y-o-y – making this the only sector to post a decline in 2Q2021.
Still, this is a moderation from the 15.1% contraction posted in the previous quarter.
A key contributor to this was the shrinkage in the rental & leasing segment as travel restrictions affected the rental & leasing of air transport equipment. This however, was “more than offset” by expansions in other administrative & support services segments, says MTI.
Taking into account the GDP performance in 1Q2021, the Singapore economy expanded by 7.7% on a year-on-year basis in the first half of the year.
MTI notes that the recovery in Singapore’s demand is largely on track for the rest of the year.
Cover image: file photo
