Singapore’s coronavirus-hit economy shrank at a slower pace in the third quarter as restrictions were eased, official data showed Wednesday, but the trade-reliant city-state still faces a long road to recovery.
The financial hub plunged into its first recession since the 2008 global financial crisis in the second quarter when the government closed businesses as part of drastic measures to contain infections.
One of the world’s most open economies, Singapore is seen as a bellwether for the health of global trade, and its economy’s dramatic deterioration rang alarm bells.
“The worst is over for Singapore, but the path to recovery is still a bit bumpy,” Song Seng Wun, a regional economist with CIMB Private Banking, told AFP.
In July-September, gross domestic product shrank 7.0 percent year-on-year, according to preliminary data released by the trade ministry.
While a heavy fall, it was better than the record 13.3 percent drop registered in April-June, with many businesses having re-opened as Singapore’s outbreak slows.
Compared with the previous quarter, the economy grew 7.9 percent, rebounding from a 13.2 percent drop, the ministry said.
Manufacturing, which includes key semiconductor exports, was up 2.0 percent, a turnaround from negative growth in April-June.
The services sector also shrank at a slower pace, although it was still weighed down by the anaemic performance of the key tourism sector as global air travel remains largely grounded.
Construction was down 44.7 percent, but that was better than the previous quarter’s near 60 percent plunge.
Singapore’s central bank also kept monetary policy unchanged Wednesday, saying an “accommodative policy stance” was appropriate as the economy recovers.
Singapore’s trade-reliant economy is typically hit first by external shocks before ripples spread across the region. However, it usually also recovers quickly from any downturn.
The city-state won praise for keeping the pandemic in check in the early stages only for serious outbreaks to emerge later in crowded dormitories housing low-paid migrant workers.
But its outbreak has slowed markedly in recent weeks, and only a handful of cases are being recorded a day.