Singapore's economy shrinks 7 per cent in Q3 year-on-year: MTI

SINGAPORE — Singapore’s economy contracted 7 per cent compared with the same quarter a year ago, flash estimates from the Ministry of Trade and Industry (MTI) showed. 

However, compared with the previous quarter on a non-annualised seasonally-adjusted basis, it grew 7.9 per cent.

The second quarter of this year bore the brunt of the economic fallout resulting from the Covid-19 pandemic, contracting 13.3 per cent compared with a year ago and plunged Singapore into its worst recession since its independence.

MTI said on Wednesday (Oct 14): “The improved performance of the Singapore economy in the third quarter came on the back of the phased reopening of the economy following the circuit breaker.” 

The circuit breakers refers to the April and May period when the country went into lockdown with restrictions on movement and activities.

MTI kept to its forecast of a 5 to 7 per cent economic contraction for the year. 

Taking into account the 0.3 per cent decline in the first quarter, the economy shrank 6.7 per cent in the first half of this year. 

The construction and services-producing sectors were been the hardest hit.

The construction sector contracted 44.7 per cent in the third quarter compared with the same period a year ago, extending the 59.9 per cent decline in the previous quarter.

“Construction output in the third quarter remained weak on account of the slow resumption of construction activities due to the need for construction firms to implement safe management measures for a safe restart,” MTI said in its statement.

The services-producing sector shrank 8 per cent in the third quarter, compared with a year ago, improving from the 13.6 per cent decline in the previous quarter. 

Within services, aviation and tourism-related businesses continued to see significant contractions due to the decimation of global travel demand. 

Trade-related services sectors, such as wholesale trade, have been affected by weak external demand from overseas markets since major economies are still grappling with the Covid-19 pandemic, MTI added. 

Consumer-facing sectors such as retail and food services are performing better, but MTI said that they remained in contraction. Sales volumes are still below levels seen a year ago due to weak consumer confidence and capacity constraints resulting from safe distancing measures. 

Only the financial services as well as the information and communication sectors recorded steady growth during the quarter.

Also bucking the trend is the manufacturing sector, which grew 2 per cent in the third quarter compared with the same period a year ago, reversing its 0.8 per contraction in the previous quarter. 

“Growth of the sector was supported by output expansions in the electronics and precision engineering clusters, which were in turn driven by robust global demand for semiconductors and semiconductor manufacturing equipment,” MTI said.