SINGAPORE – The Singapore economy grew at a record pace in the second quarter of 2021, due to the comparison with the same period last year when the Covid-19 pandemic plunged the economy into its worst recession.
Gross domestic product (GDP) expanded 14.3 per cent year on year in the April to June quarter, the Ministry of Trade and Industry (MTI) said on Wednesday (July 14).
The strong growth was largely due to the low base in the second quarter of last year, when GDP plunged by 13.3 per cent due to the circuit breaker measures implemented from April 7 to June 1, MTI said.
However, on a quarter-on-quarter seasonally-adjusted basis, the Singapore economy contracted by 2 per cent in the second quarter of this year, a reversal from the 3.1 per cent growth in the preceding quarter.
In absolute terms, GDP in the second quarter remained 0.9 per cent below its pre-pandemic level in the same period of 2019, MTI said.
The quarter-on-quarter dip in GDP was expected because of tightened Covid-19 restrictions during Singapore’s phase two (heightened alert), which stretched from May 16 to June 13.
Despite the latest curbs, economists have said Singapore’s recovery remains on track, driven by manufacturing and exports, sectors more immune to Covid-19 curbs.
The flash figures for the second quarter, however, are lower than the forecasts of economists polled by Bloomberg, who predicted year-on-year growth of 14.8 per cent and a quarter-on-quarter decline of 1.8 per cent.
MTI has maintained its full-year 2021 growth forecast of 4 per cent to 6 per cent, made first in November last year. The full-year forecast will be reviewed again next month.
Thanks to an accelerated pace of vaccination, private-sector economists last month raised Singapore’s 2021 growth forecast again to 6.5 per cent.
Singapore’s manufacturing output grew for a seventh consecutive month in May, increasing 30 per cent year-on-year – the biggest increase since November 2010.
Enterprise Singapore also in May said non-oil domestic exports are now expected to expand between 1 per cent and 3 per cent for the year, up from 0 per cent to 2 per cent.
The MTI data on Wednesday showed that the key manufacturing sector expanded by 18.5 per cent year-on-year in the second quarter, extending the 11.3 per cent growth in the previous three-month period.
Growth was supported by all clusters except for biomedical manufacturing . The electronics and precision engineering clusters continued to expand due to robust global demand for semiconductor and semiconductor equipment.
Still, on a quarter-on-quarter seasonally-adjusted basis, the manufacturing sector contracted by 1.8 per cent, a pullback from the 11.4 per cent expansion in the first quarter.
The construction sector expanded by 98.8 per cent on a year-on-year basis, a turnaround from the 23.1 per cent contraction in the first quarter. The sharp upturn was due to low base effects as last year’s circuit breaker measures had resulted in a stoppage of most construction activities in the second quarter of last year.
In absolute terms, the value-add of the sector remained 31.6 per cent below the level where it was before the pandemic in the second quarter of 2019.
On a quarter-on-quarter seasonally-adjusted basis, the construction sector shrank by 11 per cent in the second quarter of this year, a reversal from the 4.5 per cent growth in the previous quarter.
Across the service sectors – the wholesale and retail trade, and transportation and storage sectors grew by 9.3 per cent in the second quarter of this year, reversing the 1.7 per cent contraction in the previous quarter.
Meanwhile, the information and communications, finance and insurance and professional service sectors collectively expanded by 7.8 per cent, extending the 3.2 per cent growth in the first quarter.
The remaining group of service sectors – accommodation and food service, real estate, administrative and support service and other service sectors – expanded by 13.4 per cent, a turnaround from the previous quarter’s 3.8 per cent contraction.
Most sectors within the group grew on the back of a low base in the second quarter of last year due to the circuit breaker.
On the whole, the value-added of this group of sectors remained 11.8 per cent below its level in the second quarter of 2019.