Singapore's economy contracted by 5.4 percent in 2020, capping a year battered by the coronavirus pandemic, data showed on Monday. The severe contraction marks Singapore's first annual contraction in twenty years and the worst recession since independence.
However, the performance of the city state's economy was better than expected. According to the advance estimate, the economy would have contracted 5.8 percent. "This represented the worst full-year recession since Singapore's independence, and was a direct result of the economic fallout from the COVID-19 pandemic," Gabriel Lim, permanent secretary at the Ministry of Trade and Industry (MTI), said.
Despite the huge blow to the economy handed by the pandemic, the government maintained the growth forecast for 2021 between 4 and 6 percent. MTI said it as maintaining a higher growth projection based on positive developments in the global and domestic economic environment.
"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," the ministry said, according to the Channel News Asia.
Uncertainties and Risks
The ministry said there were significant risk to the economy going forward. These include uncertainty over the course of the global recovery from the coronavirus pandemic and the impairment to the global financial system. Domestically, Singapore is on top of the pandemic as vaccination program swiftly gong ahead.
The economy will report a gradual recovery throughout this year, though growth will be uneven across sectors. MIT said. On a positive note, MIT said manufacturing will grow faster, given the robust demand for semiconductor products. However, growth will be slower in sectors like tourism and aviation. These sectors will not return to pre-COVID levels even by the end of the year, MTI added.
Singapore Prime Minister Lee Hsien Loong had warned last month that, while the country had opened up following months of curbs, the economic revival would be uneven. He said that while the country was seeing signs of stabilization, economic activity would likely remain below pre-COVID-19 levels for some more time.
"After our most severe downturn since independence, we look forward to a rebound in 2021, although the recovery will be uneven, and activity is likely to remain below pre-COVID-19 levels for some time," the prime minister said in a New Year message. "Economically, we are not yet out of the woods either, but we are beginning to see signs of stabilisation," he added.