SINGAPORE – The Singapore economy expanded 1.3% on a year-on-year (y-o-y) basis in the first quarter of 2021, a reversal from the 2.4% contraction in the previous quarter, said the Trade and Industry Ministry.
In a report released today, it said on a quarter-on-quarter, seasonally adjusted basis, the economy grew 3.1%, extending the 3.8% expansion in Q4 2020.
Considering the larger-than-usual degree of uncertainty over the course of the Covid-19 pandemic, the ministry said it decided to maintain the gross domestic product growth forecast for 2021 at 4.0% to 6.0% for now.
“A review of the forecast will be undertaken in August, when there is another quarter of data, as well as greater clarity on the global and domestic economic situations.”
As for economic performance in Q1, the manufacturing sector expanded 10.7% y-o-y, slightly faster than the 10.3% growth in the previous quarter.
“The growth was due to output expansions in the electronics, precision engineering and chemicals clusters, which outweighed output declines in the transport engineering, general manufacturing and biomedical manufacturing clusters.”
This was followed by the wholesale trade sector, which expanded 3.5% y-o-y; retail trade (1.4%); accommodation (19.0%); information and communications (6.4%); and, finance and insurance (4.7%).
The other services industries expanded 0.5% y-o-y, a turnaround from the 5.7% contraction in Q4.
Meanwhile, the construction sector contracted 22.7% y-o-y, improving from the 27.4% contraction in the previous quarter.
“The performance of the sector was weighed down by declines in both public and private sector construction works,” said the ministry.
Transportation and storage shrank 16.5%, followed by food and beverage services (9.4%); real estate (3.9%); professional services (4.5%); and, administrative and support services (12.9%).
As for the economic outlook for this year, the ministry said while it is possible that the Singapore economy will outperform the growth forecast of 4.0% to 6.0%, there are significant downside risks.
“The most important is the trajectory of the Covid-19 pandemic.”
It said countries are experiencing recurring waves of infection with the emergence of more transmissible strains, easing of safety restrictions, and vaccination delays.
“These resurgences, as well as countries’ public health responses, will inevitably affect economic growth.”
Given the experience of the last 15 months, said the ministry, there is hope that even if outbreaks flare up, nations will be able to avoid repeated blanket lockdowns and their high economic cost – but this is far from certain.
“As these countries include some of our major economic partners in the region, the uncertainty in their outlook also affects Singapore.”
Though Covid-19 is generally well under control in the republic, where there has been good progress in vaccination, significant risks and uncertainties are still present.
“These non-economic risks can have a major impact on our GDP growth this year,” said the ministry. – Bernama, May 25, 2021
