Singapore's virus-hit economy suffers worst decline in 2020; GDP contracts by 5.8%


A file photo of container cranes pictured at the Port of Singapore. Singapore's Ministry of Trade and Industry announced on Monday (Jan 4) that based on advance estimates, the country's gross domestic product (GDP) for the whole of 2020 fell by 5.8 per cent year on year, compared to the 0.7 per cent growth in 2019. - Reuters

SINGAPORE, Jan 4 (AFP/Xinhua): Singapore's economy suffered its worst ever annual contraction in 2020 as the coronavirus pandemic hammered the city-state's vital trade and tourism sectors, official data showed Monday.

But the 5.8 per cent decline was not as bad as feared -- official forecasts had predicted a fall of up to 6.5 per cent -- as economic activity picked up with the easing of curbs.

Singapore's Ministry of Trade and Industry announced on Monday morning (Jan 4) that based on advance estimates, the country's gross domestic product (GDP) for the whole of 2020 fell by 5.8 percent year on year, compared to the 0.7 percent growth in 2019.

For the fourth quarter of 2020, Singapore's economy contracted by 3.8 percent year on year, an improvement from the 5.6 percent contraction recorded in the third quarter.

On a quarter-on-quarter seasonally-adjusted basis, the economy grew by 2.1 percent, following the 9.5 percent expansion in the third quarte

The financial hub plunged into its first recession since the 2008 global financial crisis in the second quarter when the government closed most workplaces as part of drastic measures to contain infections.

One of the world's most open economies, Singapore is seen as a bellwether for the health of global trade, and its economy's dramatic deterioration rang alarm bells.

But curbs were eased in the second half of the year and key sectors of the economy, such as manufacturing, have begun to recover.

In the fourth quarter, the economy shrank 3.8 percent year-on-year, less than expected, according to preliminary growth data released by the trade ministry.

Song Seng Wun, a regional economist with CIMB Private Banking, told AFP the contraction was not as bad as feared due to strong exports of some goods.

Song said he expects a "rebound of around six percent" this year.

"We are seeing businesses continuing to benefit from the further easing of restrictions and stronger global demand for (microchips) and medicines," he said.

Singapore's small economy is typically hit first by external shocks before ripples spread across the region. However, it usually also recovers quickly from any downturn.

The city-state won praise for keeping the pandemic in check in the early stages only for serious outbreaks to emerge later in crowded dormitories housing low-paid migrant workers.

But its outbreak has slowed markedly in recent weeks, and only a handful of cases are being recorded a day.

Authorities last week began a coronavirus vaccination campaign, making it among the first Asian nations to roll out inoculations.

In a breakdown, Singapore's manufacturing sector expanded by 7.1 per cent in 2020. It expanded by 9.5 per cent year on year but contracted by 2.6 per cent quarter on quarter in the fourth quarter.

The trade ministry attributes the sector's year-on-year growth to output expansions in the electronics, biomedical manufacturing and precision engineering clusters, which outweighed output declines in the transport engineering and general manufacturing clusters.

The construction sector contracted by 33.7 per cent in 2020. It contracted by 28.5 per cent year on year but expanded by 34.4 per cent quarter on quarter in the fourth quarter of last year.

Meanwhile, Singapore's services producing industries contracted by 7.8 per cent in 2020. For the fourth quarter, the services producing industries shrank by 6.8 per cent year on year but grew 2.4 percent quarter on quarter.

The advanced GDP estimate figure released on Monday were computed largely from data in the first two months of the fourth quarter of 2020, according to the ministry. These figures are intended as an early indication of the GDP growth in the quarter, and are subject to revision when more comprehensive data become available.

The ministry said it will release the preliminary GDP estimates for the fourth quarter and the whole of 2020 this February. - AFP/Xinhua
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