Still reeling from the effects of the COVID-19 pandemic that has slowed down businesses since the beginning of the year, Singapore’s economy continues to reflect the aftereffects of the past lockdowns.
Singapore’s Gross Domestic Product (GDP) in the third quarter of 2020 declined by 7 percent on a year-on-year basis, based on an advanced estimate report on Wednesday (October 14) from the country’s Ministry of Trade and Industry.
This is an improvement compared to the previous quarter which showed the island nation’s economy rebounding from the 13.2 percent contraction in the second quarter of 2020.
On a quarter-on-quarter seasonally adjusted basis, the Singapore economy expanded by 7.9 percent, an improvement from the 13.2 percent contraction in the previous quarter.
As the economy of Southeast Asia’s main economic hub recovers from the closures of businesses, Singapore’s economic performance picked-up the pace to recovery as many retail stores, businesses, and industries slowly re-opened in the previous quarter.
Through a phased reopening following Circuit Breaker measures implemented by the Singaporean government, economic activities in its main business districts and industries have gradually recovered.
The government implemented Circuit Breakers or stay-at-home orders and cordon sanitaire activies as a preventive measure as the country suffered resurgence of cases coming from its migrant community on April 7. Circuit Breakers were enforced by the government from April 7 to June 1.
Singapore’s economy by sector
Among the worst industries affected by the pandemic in the third quarter is the country’s Construction sector. The construction sector shrank by 44.7 percent on a year-on-year basis in the third quarter, extending the 59.9 per cent decline in the previous quarter.
According to MTI data, construction output in the third quarter remained weak on account of the slow resumption of construction activities due to the need for construction firms to implement safe management measures for a safe restart.
On a quarter-on-quarter seasonally-adjusted basis, the construction sector grew by 38.7 percent, a rebound from the sharp contraction of 59.4 percent recorded in the second quarter of 2020 when most construction activities had to come to a stop due to the Circuit Breaker measures and movement restrictions in the foreign worker dormitories.
The Services Producing Industries like aviation and tourism companies also declined by 8 percent on a year-on-year basis in the third quarter of 2020. This is an improvement from the 13.6 percent decline in the previous quarter.
Within services sector, aviation- and tourism-related sectors like air transport and accommodation continued to see significant contractions, as global travel restrictions and sluggish travel demand brought air travel and visitor arrivals to a near complete standstill.
Other trade-related services sectors, such as wholesale trade, were also weighed down by weak external demand as major economies around the world continued to grapple with the COVID-19 pandemic.
On a positive note, Singapore’s manufacturing sector grew by 2 percent on a year-on-year basis, a reversal from the 0.8 per cent contraction in the previous quarter.
Growth of the manufacturing sector was supported by output expansions in the electronics and precision engineering clusters. The manufacturing sector also saw robust global demand for semiconductors and semiconductor manufacturing equipment.
On a quarter-on-quarter seasonally-adjusted basis, the manufacturing sector expanded by 3.9 percent, a turnaround from the 9.1 percent contraction in the second quarter.
Consumer-facing sectors mark improvements
Meanwhile, even though consumer-facing sectors such as retail and food services saw an improvement in performance as the Singapore economy exited the Circuit Breaker, they remained in contraction.
Sales volumes of retail and food services came in below previous year’s levels due to weak consumer confidence and capacity constraints resulting from safe distancing measures.
The finance, insurance, and information communications sectors recorded steady growth during the third quarter. On a quarter-on-quarter seasonally-adjusted basis, then services producing industries expanded by 6.8 per cent, a reversal from the 11.2 percent decline seen in the second quarter.
Singapore’s MTI will release the preliminary GDP estimates for the third quarter, including performance by sectors, sources of growth, inflation, employment and productivity, in its Economic Survey of Singapore in November 2020.
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