Economy contracted 5.8% in 2020

The manufacturing sector improved, whilst the services sector continued to falter.

Singapore’s economy contracted 5.8% for the whole year of 2020, although local gross domestic product (GDP) steadily improved in the final quarter, according to data from the Ministry of Trade and Industry (MTI).

The economy shrunk by 3.8% YoY in Q4, progressing from the 5.6% YoY contraction in Q3. On a seasonally-adjusted basis, the economy grew by 2.1% to extend the 9.5% expansion in the third quarter.

The manufacturing sector notedly expanded 9.5% YoY in Q4 , continuing the 10.8% YoY growth in the previous quarter, supported primarily by output expansions in the electronics, biomedical manufacturing and precision engineering clusters, which outweighed output declines in the transport engineering and general manufacturing clusters.

However, on a quarter-on-quarter seasonally-adjusted basis, the manufacturing sector contracted by 2.6%, reversing the 12.6% expansion in Q3.

Meanwhile, the construction sector shrank by 28.5% YoY in Q4, from a 46.2% YoY contraction in Q3. The improved performance was attributed to the resumption of more construction activities in the fourth quarter. On a quarter-on-quarter seasonally-adjusted basis, the construction sector grew by 34.4%, extending the 39% growth in Q3.

Other sectors registered mixed results. The services sectors continue to face challenges, with the wholesale & retail trade, and the transportation & storage sectors shrinking by 11% in Q4. Performance of these sectors was primarily weighed down by the trade-related segments such as wholesale trade and water transport, which contracted due to sluggish external demand as major economies around the world continued to grapple with the COVID-19 pandemic, according to the MTI.

The services sectors also continues to be negatively affected by the air transport segment, which shrank on the back of ongoing global travel restrictions and weak travel demand. Compared to the third quarter of 2020, the sectors in the group expanded by 1.2%, softening from the 4.3% growth recorded in the third quarter.

Meanwhile, the information & communications, finance & insurance, and professional services sectors collectively grew by 0.2%, reversing the 0.2% contraction in the third quarter. Growth was reportedly supported by steady expansions in the information & communications and finance & insurance sectors, even as the professional services sector contracted due to sluggish economic  activity  in  the  region and  domestically, noted MTI. 

On a quarter-on-quarter seasonally-adjusted basis, the sectors in the group expanded by 2.5%, extending the 2.9% growth registered in Q3.

The remaining group of services sectors—accommodation & food services, real estate, administrative & support services and other services industries—declined by 9.9%, an improvement from the 13.5% contraction in the Q3. The accommodation segment continues to shrink as a result of weak tourism demand, whilst the performance of the food services segment and other services industries that include the as  arts,  entertainment & recreation industry were weighed down by constraints arising from  the  implementation  of  safe  management  measures. 

On a quarter-on-quarter seasonally-adjusted basis, these sectors collectively expanded by 4.5%, slowing from the 11.7% growth recorded in Q3.