Singapore’s Gross Domestic Product (GDP) slumped 7% year-on-year in 3Q2020 ended September, according to advance estimates penciled by the Ministry of Trade and Industry (MTI) on Oct 14.
This is a significant improvement from the historic 13.3% plunge logged in 2Q2020 ended June, and is a result of the phased re-opening of Singapore’s economy after the two-month long lockdown in April and May that prohibited the operations of non-essential services.
Compared to the previous quarter, Singapore’s economy expanded by 7.9%, on a seasonally-adjusted basis.
The latest showing is in line with the 7.6% year-on-year contraction anticipated by private-sector economists in a survey released by the Monetary Authority of Singapore (MAS) on Sept 7.
The biggest plunge was seen in the construction sector which shrank by 44.7% year-on-year due to the slow resumption of activity on worksites. This is as firms needed time to implement safe management measures before allowing workers to resume work.
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Similarly, the consumer-facing services sector – which captures the performance of items such as wholesale trade, retail and food services – was down 8% year-on-year.
Albeit an improvement from the 13.6% decline seen in 2Q2020, the latest dip comes from the continued decline in the performance of aviation and tourism-related sectors which have been affected by travel restrictions imposed globally to curb the spread of Covid-19 infections.
Such restrictions similarly weighed down the wholesale trade segment as the slowdown in economies globally resulted in weaker demand.
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Items such as retail and food services similarly saw consumer volumes improving from the start of the Phase Two measures on June 19 which allows dining in at restaurants and in-person shopping at retail outlets.
Still numbers for the segments have yet to return to pre-covid-19 levels due to the weak labour market which has put a dent on consumer confidence as well as capacity constraints resulting from safe distancing measures, notes OCBC Bank’s chief economist Selena Ling.
Touching on the performance of both services and construction sector, she says improvements may come in 4Q2020 ending December if Singapore moves into Phase Three of its re-opening.
Meanwhile, the manufacturing sector was the only one to reverse into the green with a 2.0% year-on-year growth. This was supported by output expansions in the electronics and precision engineering clusters, which driven by robust global demand for semiconductors and semiconductor manufacturing equipment.
"Manufacturing and trade have been remarkably resilient in this pandemic recession," observe Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye.
The duo add that the final 3Q2020 growth figures due in November may be upgraded "as global demand for electronics appears to be firming".
For the full-year, they are looking at a 6% contraction in GDP as a recovery will be a “slow grind” until a vaccine is widely available and border controls are relaxed more significantly.
OCBC’s Ling is expecting a milder 5.5% contraction on the basis on 4Q2020 GDP coming in at -1.3% year-on-year.
