Key Points
- Data released by Singapore’s Ministry of Trade and Industry (MTI) on November 24 showed that Singapore’s economy grew by 1% year-on-year in the third quarter, better than the official estimate of 6.5%.
- After seasonal adjustments, Singapore’s economy grew by 3% quarter-on-quarter in the third quarter.
- The Ministry of Commerce has revised its forecast for Singapore’s 2021 economic growth to around 7%, the upper end of the previous forecast range of 6% to 7%.
Singapore’s economy expanded faster than initially estimated in the third quarter, and the government expects the growth rate for 2021 to be around 7%.
The MTI noted that Singapore’s economy grew by 7.1% in the third quarter compared to the previous year.
This is better than the 6.5% year-on-year growth rate forecast by the Ministry of Finance last month. However, it is lower than the 15.2% year-on-year increase in the second quarter.
After seasonal adjustments, Singapore’s economy grew by 1.3% quarter-on-quarter in the third quarter, a turnaround from the 1.4% contraction in the second quarter.
Singapore’s Economic Performance
Quarterly Gross Domestic Product (GDP) Year-on-Year Percentage Change
Here is the performance of various sectors in the third quarter:
The manufacturing sector grew by 7.2% year-on-year. All clusters within this sector expanded, except for the biomedical manufacturing cluster.
The construction sector grew by 66.3% year-on-year, mainly due to growth in both public and private sector output in the third quarter, from a low base of comparison.
In the services sector, real estate grew by 16.8% year-on-year, primarily supported by private residential property activities.
Meanwhile, the food and beverage services sector contracted by 4.2% year-on-year as Singapore tightened dining and activity restrictions to curb the spread of COVID-19.
Singapore, a city-state in Southeast Asia, has been battling a surge in new coronavirus infections, with about 85% of its population fully vaccinated.
However, in recent weeks, the government has gradually eased domestic and border restrictions, allowing more activities to resume.
Singapore’s Outlook for 2021 and 2022
The Ministry of Trade and Industry has revised its forecast for Singapore’s 2021 economic growth to around 7%, the upper end of the previous forecast range of 6% to 7%.
The Ministry of Finance said that Singapore’s economy is expected to grow by 3% to 5% next year.
The Ministry of Finance and Economics stated: “The recovery across different sectors of the economy is expected to be uneven in 2022.”
The Ministry of Finance and Economics explained that the growth prospects for outward-oriented sectors such as manufacturing and wholesale trade remain strong due to robust external demand. However, the recovery of aviation and tourism-related sectors is likely to be gradual, as global travel demand will take time to recover and travel restrictions may persist in key source markets.
The Ministry of Commerce warned that prolonged supply disruptions, a strong rebound in demand, and rising energy commodity prices could lead to more persistent inflation.
Singapore is a small, open economy that relies heavily on global trade. Official data released on Tuesday showed that Singapore’s core inflation rate rose by 1.5% year-on-year in October, the largest increase in nearly three years.
Core inflation, which excludes accommodation and private transport, is the preferred price measure of Singapore’s central bank.
Last month, the Monetary Authority of Singapore (MAS) became one of the first Asian central banks to tighten its monetary policy. The MAS stated that the move “will ensure price stability in the medium term while recognizing the risks to the economic recovery.”
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