Singapore’s economy shrinks less than expected in third quarter, with ‘glimmer of light near end of tunnel’

The Ministry of Trade and Industry narrowed its forecast for full-year GDP to a contraction of 6-6.5 per cent given the improved outlook for manufacturing

It expects GDP growth of 4-6 per cent next year but global recovery will depend on factors including US-China ties

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The skyline of Singapore’s financial district reflected in a lotus pond at the ArtScience Museum. Singapore’s economy is on track to return to growth in 2021, the government says. Photo: EPA-EFE

Published: 9:29am, 23 Nov 2020Updated: 11:32am, 23 Nov 2020

Singapore’s economy recorded a milder contraction than expected in the third quarter, the trade ministry said on Monday, thanks to the easing of coronavirus lockdown measures and an uptick in manufacturing activity.

In its fifth revision this year, the Ministry of Trade and Industry forecast that full-year gross domestic product would contract by 6-6.5 per cent versus its previous forecast of 5-7 per cent. It also projected full-year growth for 2021 to come in at a range of 4-6 per cent.

Trade and Industry Minister Chan Chun Sing said while there was still work to be done to get the economy back on track, Singapore’s near-zero infection numbers and resumption of more business and travel activities showed “a glimmer of light near the end of the tunnel”.

In October, the ministry had forecast that GDP in the third quarter would shrink by 7 per cent year on year, but on Monday reported a contraction of 5.8 per cent. The city state’s economy grew 9.2 per cent on a quarterly, seasonally adjusted basis, also revised up from the 7.9 per cent October estimate, and rebounding from the 13.2 per cent contraction in the second quarter.

We do not yet know how the new US administration will approach its relations with China. But we hope both sides will dial down tensions

Chan Chun Sing, Singapore’s Trade and Industry Minister

Growth in the third quarter was propped up by the manufacturing sector, which grew 10 per cent on a year-on-year basis, sharply rebounding from the 0.8 per cent contraction in the second quarter. This was primarily driven by the strong pickup in the electronics and pharmaceutical industries.

Even so, the ministry said that the global economic situation remains subdued. While China is expected to see a sustained recovery, other parts of the world, including the US and the Eurozone, are battling a new wave of infections.