Singapore ’s economy contracted less than initially estimated in the fourth quarter, putting the country on a path to a gradual recovery in 2021 after it marked its worst ever recession last year due to the Covid-19 pandemic . Gross domestic product (GDP) fell 2.4 per cent year on year in the quarter, the Ministry of Trade and Industry said on Monday, versus the 3.8 per cent drop seen in the government’s advance estimate. Analysts had expected a contraction of 3.5 per cent, according to a Reuters poll. “The Singapore economy is projected to see a gradual recovery in 2021, with GDP not expected to return to pre-Covid levels until the second half of the year,” said Gabriel Lim, the ministry’s permanent secretary. What Heng Swee Keat’s budget has in store for Singapore The government expects GDP to grow 4 per cent to 6 per cent this year. The economy shrank 5.4 per cent in 2020, marking its worst ever recession, compared with the advance estimate of 5.8 per cent. The government said outward-oriented sectors are likely to benefit from a pickup in global economic activity, but activity levels in sectors related to tourism and aviation are projected to remain below pre-pandemic levels even by the end of 2021. “The outlook ahead stays uneven, although we are optimistic overall,” said Jeff Ng, senior treasury strategist at HL Bank. “Barring another round of downside risks materialising, we see some possibilities of Singapore even outperforming our 2021 GDP forecast of 6.3 per cent.” Singapore, a travel and transport hub, has brought its Covid-19 situation under control with few new local cases and it has begun its vaccination programme. However, the pace of border reopening has slowed due to the global surge in cases and the emergence of more contagious strains of the virus. “For the broader economy and macro economy level, I think a large part of our recovery is still going to be somewhat linked to what’s going on in the rest of the world rather than domestically,” Lim said, citing the city state’s open and trade-reliant economy. On a quarter-on-quarter seasonally-adjusted basis, the economy expanded by 3.8 per cent in the fourth quarter. The data comes a day ahead of the city state’s budget announcement . Economists expect an expansionary but trimmed down budget to support businesses still struggling from the impact of the coronavirus. Way the music died: can Asia’s nightclubs survive Covid-19? The central bank left monetary policy unchanged at its last meeting in October and said its accommodative stance would remain appropriate for some time. Edward Robinson, deputy managing director, Monetary Authority of Singapore, told a media briefing current policy stance was unchanged. JAPAN ECONOMY Elsewhere, Japan ’s economy expanded more than expected in the fourth quarter, extending the recovery from its worst post-war recession thanks to a rebound in overseas demand that boosted exports and capital spending. But the recovery slowed from the third quarter’s brisk pace and new state of emergency curbs cloud the outlook, underscoring the challenge policymakers face in preventing the spread of Covid-19 without choking off a fragile recovery, especially in the battered consumer sector. “Conditions are such that Japan will not be able to avoid negative growth in the first quarter,” said Takumi Tsunoda, senior economist at Shinkin Central Bank Research. “There is a high possibility that there will be a repeating cycle of coronavirus infections spreading and being contained this year, which means that consumption is not likely to recover at the expected pace.” Pandemic threatens Japan’s once-ubiquitous arcades with ‘game over’ The world’s third-largest economy grew an annualised 12.7 per cent in October-December, government data showed on Monday, exceeding a median market forecast for a 9.5 per cent gain. It was slower than the revised 22.7 per cent surge in the previous quarter, when the economy got a lift from pent-up demand after a previous state of emergency was lifted in May. For the full coronavirus-stricken year, Japan’s economy contracted 4.8 per cent, the first annual fall since 2009. But Japan’s October-December performance was stronger than US growth of 4 per cent and a 2.8 per cent slump in the euro zone. With two straight quarters of solid growth, Japan’s economy likely recouped 90 per cent of pandemic-induced losses, analysts say. THAILAND Japan’s stronger-than-expected GDP data comes amid signs the pandemic’s hit to other Asian economies toward the end of last year was not as severe as first feared. Figures released on Monday showed Thailand ’s GDP shrank less than expected in the fourth quarter. Thailand cut its estimate for economic growth this year to 2.5-3.5 per cent after suffering its worst slump in more than two decades in 2020 due to the shock from the pandemic. The government had previously forecast growth of 3.5-4.5 per cent for this year, and the downward revision comes despite latest data showing the economy shrank less than expected in the October-December quarter as domestic activity and exports recovered after coronavirus restrictions were eased. ‘World’s friendliest city’ suffering – how long can tourist spots hold out? The vital tourism sector remains in limbo because of international travel restrictions, and a Covid-19 outbreak in December has dealt a further blow to the country’s fledgling recovery. Southeast Asia’s second-largest economy shrank 4.2 per cent in the final quarter of 2020 from a year earlier, after a 6.4 per cent contraction in the previous three months, National Economic and Social Development Council data showed on Monday. On a quarterly basis, the economy expanded a seasonally adjusted 1.3 per cent in the December quarter, after a revised 6.2 per cent expansion in the September quarter.