Singapore's economy grew 7.2% in 2021, rebounding from recession the previous year: MTI advance estimates

SINGAPORE: Singapore's economy grew 7.2 per cent in 2021 amid the COVID-19 pandemic, rebounding from a recession in 2020, advance estimates released by the Ministry of Trade and Industry (MTI) on Monday (Jan 3) showed.

Singapore's economy shrank 5.4 per cent in 2020 – its first annual contraction since 2001 and the country's worst recession since independence.

Last year, Singapore announced the start of its transition to living with endemic COVID-19 as it saw a wave of new infections driven by the more infectious Delta variant.

Its vaccination programme was ramped up to include booster shots and more age groups, and new measures were also introduced to curb the spread of the coronavirus.

The estimates announced on Monday met the estimates by MTI in November last year. The ministry had narrowed the gross domestic product (GDP) growth forecast for 2021 to "around 7 per cent".

GDP grew 5.9 per cent on a year-on-year basis in the fourth quarter of 2021, moderating from a 7.1 per cent expansion in the previous quarter, the preliminary data showed.

On a quarter-on-quarter seasonally adjusted basis, the economy grew 2.6 per cent in the fourth quarter of 2021, faster than the 1.2 per cent growth in the preceding quarter.

All sectors of the economy recorded year-on-year growth for the full year as well as in the fourth quarter.

Except for construction, performance in all sectors also improved in the fourth quarter on a quarter-on-quarter seasonally adjusted basis.

The advance GDP estimates for the fourth quarter of 2021 are computed largely from data in October and November last year. They give an early indication of the GDP growth in the quarter and may be revised when more comprehensive data is available, said MTI.

MANUFACTURING SECTOR

Manufacturing performance improved 14 per cent year-on-year in the fourth quarter, speeding up from 7.9 per cent in the third quarter.

The sector expanded by 12.8 per cent for the full year.

Growth in the last three months of 2021 was supported by output expansions in all clusters, said MTI.

Electronics and precision engineering in particular continued to record strong output growth, driven by sustained global demand for semiconductors and semiconductor equipment respectively, said the ministry.

On a quarter-on-quarter seasonally adjusted basis, the manufacturing sector grew 4.2 per cent, improving from 0.2 per cent growth in the third quarter.

CONSTRUCTION SECTOR

Construction recorded 2 per cent year-on-year growth in the fourth quarter, slowing from 66.3 per cent in the third quarter.

The sector improved by 18.7 per cent for the full year.

However, in absolute terms, the construction sector's value-added remained 26 per cent below pre-pandemic levels in the fourth quarter of 2019, said MTI.

The ministry said this was because activity at construction work sites continued to be weighed down by labour shortages due to border restrictions on the entry of migrant workers.

On a quarter-on-quarter seasonally adjusted basis, the sector shrank 4.4 per cent in the fourth quarter, reversing the 4.9 per cent growth in the previous quarter.

WHOLESALE AND RETAIL TRADE, TRANSPORTATION AND STORAGE

In services, the wholesale and retail trade and the transportation and storage sectors grew 4.3 per cent in the fourth quarter, extending the previous quarter's 6.1 per cent improvement.

All sectors within this group expanded during the quarter, said the ministry.

"In particular, the wholesale trade sector posted steady growth in tandem with the robust performance of Singapore's merchandise exports," said MTI.

"By contrast, growth in the transportation and storage sector was partly due to low base effects, as travel restrictions had weighed heavily on the air transport segment in the fourth quarter of last year."

Overall, the value-added of this group of sectors remained 2.3 per cent below pre-pandemic levels in the fourth quarter.

On a quarter-on-quarter seasonally adjusted basis, this group grew 2.3 per cent in the fourth quarter, turning around a 0.6 per cent contraction in the previous quarter.

INFOCOMM, FINANCE AND INSURANCE, PROFESSIONAL SERVICES

Collectively, 6 per cent growth was recorded in the fourth quarter for the information and communications, finance and insurance as well as professional services sectors.

This moderated from the 8 per cent growth in the previous quarter.

All sectors within this group expanded, with the infocomm sector in particular benefiting from strong demand for IT and digital solutions as well as robust games and software publishing activities, said MTI.

It added that the finance and insurance sector was bolstered in part by fund management activities.

Sectors in this group posted growth of 3.1 per cent in the fourth quarter on a quarter-on-quarter seasonally adjusted basis, faster than the 1.5 per cent in the previous quarter.

OTHER SERVICES SECTORS

Fourth-quarter expansion of 3.1 per cent was recorded by the remaining services sectors, comprising accommodation and food services, real estate, administrative and support services as well as other services.

Within this group, all sectors grew except for accommodation and food services, said MTI.

Weak performance in that sector was primarily due to ongoing travel restrictions, as well as tighter domestic restrictions, such as dine-in group size limits, during the fourth quarter compared to the same period in 2020, said the ministry.

Overall, the value-added of this group of sectors remained 7.1 per cent below pre-pandemic levels.

On a quarter-on-quarter seasonally-adjusted basis, this group expanded by 4.9 per cent in the fourth quarter of 2021, improving from 1.5 per cent in the previous quarter.