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What will Singapore’s economic recovery be like

Singapore‘s economic recovery is expected in 2021, after going through its worst ever recession.

In line with the rest of the world, the Covid-19 pandemic caused massive global economic disruption in 2020.

To date, the virus has infected more than 100 million people in the world and has caused more than 2 million deaths.

Many countries were forced to implement strict public health measures, including border blocks and closures, to contain the spread of the virus.

This caused major changes in world economic activity.

In particular, Singapore’s economy was not spared the damage caused by the pandemic and contracted 5.4% in 2020, its worst recession in a full year since independence.

Economic recovery

This severe recession came as the economy had to deal with supply and demand shocks stemming from the pandemic, including a drop in external demand for goods and services produced in Singapore caused by the economic slowdown in major economies and global travel restrictions and supply chain disruptions.

At first, the effects of these shocks were most pronounced in the first half of 2020.

Then there were signs of Singapore’s economic recovery in the second half of 2020, as the economy gradually reopened and major economies emerged from their initial lockdowns.

In general, unless the downside risks materialize, the Singapore Ministry of Commerce and Industry foresees a gradual economic recovery in its country and that the national GDP will expand between 4.0 and 6.0% this year.

According to the Ministry, GDP is not likely to return to pre-Covid-19 levels until the second half of 2021 at the earliest.

In addition, the Ministry expects the pace of economic recovery to remain uneven in all sectors.

Economic sectors

Specifically, according to the Ministry’s projections, the tourism and aviation-related sectors are unlikely to return to pre-pandemic levels, even by the end of 2021, due to the slow lifting of global travel restrictions and the Weak global demand for air travel amid the emergence of more contagious variants of the virus.

Similarly, slower recovery in visitor arrivals and capacity constraints due to safe distancing measures are likely to continue to affect the performance of consumer-oriented sectors, hampering their return to pre-pandemic levels at throughout 2021.

On the other hand, the recovery of the construction sector and the marine and offshore engineering segments will also be slow due to the continuing need for safe management measures in workplaces and shipyards, as well as slow demand derived from the drop in construction contracts awarded in 2020 and weakness in the global oil and gas market, respectively.

By contrast, outward-facing sectors, which had already surpassed or recovered near pre-pandemic levels in the fourth quarter of 2020, are expected to continue to benefit from the global economic recovery this year.