Singapore's central bank kept its exchange rate-based policy unchanged even as the economy surprisingly posted a growth 0.2 percent in the first quarter of 2021 compared with a year ago.
The growth, which is based on official advance estimates, marks the Southeast Asian country's first economic expansion since the beginning of the coronavirus outbreak at the end of 2019.
Singapore's economic turnaround followed three straight quarters of contraction as the economy was battered by the coronavirus pandemic.
At the same time, on a quarter-on-quarter basis, the GDP rose by 2 percent in the last quarter, extending the 3.8 percent growth in the last quarter of 2020. previous quarter. The unexpected spike in GDP numbers surprised analysts, who has foreseen a decline of 0.2 percent.
In 2020, Singapore's economy contracted 5.4 percent, capping a year battered by the coronavirus pandemic. The severe contraction was Singapore's first annual contraction in twenty years and the worst recession since independence.
Gradual Recovery Throughout Year
However, at that point, Singapore's Ministry of Trade and Industry (MTI) had said the economy will report a gradual recovery throughout this year, though growth will be uneven across sectors. It said manufacturing will grow faster, given the robust demand for semiconductor products. However, growth will be slower in sectors like tourism and aviation.
Data showed on Wednesday that goods-producing industries expanded 3.3 percent from a year ago, while the construction sector continued to contract. The services industries also shrank by 1.2 percent on a year-on-year basis. The construction sector contracted a whopping 20.2 percent in the first quarter, but the contraction was less severe than the 27.4 percent decline marked in the fourth quarter of 2020.
"Growth was supported by healthy expansions in the information and communications and finance and insurance sectors, even as the professional services sector contracted," said MTI.
According to analysts, Singapore's economy will continue to recover in the year ahead. "The export sector is set to remain strong, on the back of buoyant global demand for semiconductors, advanced manufacturing equipment and pharmaceutical components," Alex Holmes, Asia economist at consultancy Capital Economics, told CNBC.