Singapore, 16 February 2021 – The Ministry of Trade and Industry (MTI) announced yesterday that the Singapore economy contracted by 5.4 per cent in 2020. Meanwhile, the construction sector declined by 35.9 per cent—a sharp retraction from the 1.6 per cent growth seen in 2019.
The Singapore economy contracted by 2.4 per cent on a year-on-year basis in Q4 2020, an improvement from the 5.8 per cent contraction in the preceding quarter. On a quarter-on-quarter seasonally-adjusted basis, the economy expanded by 3.8 per cent, following the 9.0 per cent growth recorded in the previous quarter.
The construction sector contracted by 27.4 per cent year-on-year in Q4 2020 due to declines in both public sector and private sector construction works. This was an improvement from the 52.5 per cent contraction recorded in the third quarter. On a quarter-on-quarter seasonally-adjusted basis, the sector expanded by 55.6 per cent, faster than the 37.5 per cent growth in the previous quarter.
As a comparison, below is the summary of other sectors’ performance in Q4 2020:
Along with marine and offshore engineering, the construction sector is projected to recover from the low base last year. Activity levels at construction worksites and shipyards will continue to be dampened by the requirement for safe management measures. The recovery in output in these two sectors is expected to be slow due to the plunge in contracts awarded for construction works in 2020 and the weakness in the global oil and gas market, respectively.
The construction sector shrank by 35.9 per cent, a sharp retraction from the 1.6 per cent growth posted in 2019. This was due to a decline in both public sector and private sector construction works. Most services sectors also saw a full-year contraction due to the widespread economic impact of the COVID-19 pandemic.
For the whole of 2020, the Singapore economy contracted by 5.4 per cent, a reversal from the 1.3 per cent growth recorded in 2019. The manufacturing sector expanded by 7.3 per cent, a turnaround from the 1.5 per cent contraction in 2019. The sector’s growth was supported by robust expansions in the biomedical manufacturing, electronics and precision engineering clusters.
Since the Economic Survey of Singapore in November 2020, there has been ongoing progress in COVID-19 vaccine development and deployment, with several approved vaccines being rolled out.
Although the speed of vaccine deployment varies, advanced economies like the US and Eurozone are likely to reach population immunity by the second half of this year, which should in turn spur their economic recovery. On the other hand, the growth prospects for regional economies such as Malaysia and Indonesia have weakened due to the recent resurgence in infections. This has necessitated the reimposition of lockdowns and restrictions.
On balance, as the positive developments in the key external economies broadly offset the negative ones, Singapore’s external demand outlook remains largely similar compared to three months ago.
Domestically, Singapore’s COVID-19 situation remains under control and the vaccination programme is also underway. However, the pace of border re-opening has slowed amidst the global surge in COVID-19 cases and the emergence of more contagious strains of the virus.
Against this external and domestic backdrop, the Singapore economy is expected to see a gradual recovery over the course of the year, although the outlook remains uneven across sectors.
Taking into account the developments in the global and domestic economic environments, the GDP growth forecast for 2021 maintains at 4.0 to 6.0 per cent.
– Construction+ Online
Source: Ministry of Trade and Industry