Singapore’s economy progressed faster than expected

Singapore’s economy expanded faster than initially estimated, while the government suspects 2021 growth to come in at around 7.1%.

On Wednesday, the Ministry of Trade and Industry said that the Singapore economy expanded 7.2% compared with the same period a year ago.

As the ministry proposed last month, this outcome seemed better than the estimated 6.4% growth. However, it seems slower than the 15.3% growth reported in the second quarter.

On a seasonally adjusted basis, the economy of Singapore increased by 1.4% in the current quarter. The ministry said that it was a turnaround from the 1.5% decrease in the second quarter.

The third quarter: how multiple sectors performed

• Manufacturing increased by 7.3% from the same period a year ago. All groups within the sector grew, excluding the biomedical manufacturing group.
• Construction increased by 66.4%, mainly because of a low comparison base as production in public and private sectors grew in the third quarter.
• The real estate grew by 16.9% among services industries.
• In the meantime, the food and beverage services sector contracted 4.3% from the same period a year ago as Singapore set restrictions to control the spread of the virus.

2021 and 2022 outlook

The ministry of trade and industry updated its 2021 economic growth estimates for Singapore to around 8%.

Moreover, the ministry said that next year, the economy in Singapore might grow by 4% to 5%.

The ministry also said that the recovery of the various sectors will remain irregular next year.

It revealed that growth forecasts for sectors including manufacturing and wholesale trade continue to be substantial given external solid demand.

However, recovery in sectors such as tourism and aviation might be classified as unstable as global travel demand will take more time to recover. It added that travel restrictions might remain unchanged.

The ministry warned that extended supply interruptions besides a more robust pickup in demand while increasing energy commodity prices might lead to more determined inflation.

Singapore is a small and welcoming economy mainly depending on global trade. In October, core inflation in the country increased 1.6% from the same period a year ago. Tuesday, official data showed that it was ranked as the most significant jump in nearly three years.

In October, Singapore’ Authority became one of the first Asian central banks to squeeze monetary policy. According to the MAS, the move will guarantee price stability while identifying the risks to economic recovery.