SINGAPORE: Singapore's economy grew by 0.2 per cent year-on-year in the first quarter of 2021, a turnaround after three quarters of contraction, as the country continued its recovery from the COVID-19 pandemic.
On a quarter-on-quarter seasonally adjusted basis, Singapore's gross domestic product (GDP) expanded by 2 per cent between January and March, extending the 3.8 per cent growth in the previous quarter, advance estimates by the Ministry of Trade and Industry (MTI) on Wednesday (Apr 14) showed.
Economists polled by Reuters had expected a decline of 0.2 per cent.
Singapore's economy has been battered by the COVID-19 pandemic. After the first case was reported in Singapore on Jan 23 last year, Singapore posted 0 per cent growth in GDP in the first quarter, followed by contractions in the following three quarters.
Last year, the economy shrunk by 5.4 per cent, Singapore's first annual contraction since 2001 and its worst recession since independence.
"The expansion is a strong signal that our economy is slowly but surely recovering from the unprecedented impact of COVID-19 last year," said Minister for Trade and Industry Chan Chun Sing in a Facebook post after the data was released.
“While we are cautiously optimistic, many downside risks remain which we will have to pay close attention to,” he added.
Singapore's economy rose on the back of strong manufacturing activity.
The sector grew 7.5 per cent year-on-year, supported by output expansions in the electronics, precision engineering, chemicals and biomedical manufacturing clusters.
The construction sector continued to contract, albeit at a slower rate, as activity in the private and public sectors picked up.
The sector shrank by 20.2 per cent in the first quarter, compared with the 27.4 per cent decline in the fourth quarter of 2020.
Among the services sectors, the wholesale and retail trade as well as transportation and storage trade sectors shrank by 4.1 per cent in the first quarter.
A "continued weakness" in the transportation and storage sector was primarily caused by the impact of the COVID-19 pandemic affecting air, water and land transport segments. This was mitigated by the expansion in wholesale and retail trade sectors.
The information and communications, finance and insurance, as well as professional services sectors collectively grew by 3.7 per cent in the first quarter, faster than the 1.4 per cent expansion in the preceding quarter.
"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.
Contraction in the professional services sector was due in part to weak economic activity in the region, as well as "sluggish" domestic construction activity, which had weighed on the architectural and engineering segment of the sector, the ministry added.
The remaining group of sectors - accommodation and food services, real estate, administrative and support services and other services industries - contracted by 3.9 per cent. All sectors within the group shrank, except for accommodation, as activities continued to be weighed down by COVID-19 safe management measures.
Singapore's first-quarter performance puts it among the first few Asian economies to turn the corner to positive year-on-year GDP growth, said Mr Prakash Sakpal, senior economist for Asia at ING.
In the second quarter, Singapore can expect to see a "significant jump" in GDP growth due to the sharp plunge of activity during the "circuit breaker" period last year, said Mr Sakpal. This will taper down over the second half of the year.
ING has forecast that Singapore's second-quarter GDP may rise 14.2 per cent year-on-year, before settling at 4.9 per cent for the whole year.
In his Facebook post, Mr Chan said that it is "clearer than ever" that Singapore's post-COVID-19 economy "will be a very different one".
"The path of the pandemic remains uncertain with the emergence of new variants and the uneven global roll out of vaccine deployment," said Mr Chan.
"The multilateral trading system remains under stress as countries prioritise unilateral trade measures in order to protect domestic interests. Our economic recovery will also be uneven with sectors such as aviation and tourism facing a protracted recovery due to travel restrictions globally,” he added.
MTI will release the preliminary GDP estimates for the first quarter of 2021 next month.
Phase 3 of Singapore’s reopening started on Dec 28 last year, with permitted social gathering sizes expanded from five to eight.
Capacity limits at public places, such as shopping malls, attractions and places of worship, were also eased.
The country has also started its roll-out of two COVID-19 vaccines – made by Pfizer-BioNTech and Moderna – while a third by Sinovac is currently under review.
As of Apr 14, about 1.6 million doses of COVID-19 vaccine doses have been administered, according to the Ministry of Health's website. More than 1.1 million people have received at least one dose, and 535,864 have received their second dose and completed the full vaccination regimen.
The Government plans to invite people under the age of 45 to book slots from June for their COVID-19 vaccinations. The aim is to complete the vaccination programme as scheduled by end-2021.