Aerial panorama over the towering skyscrapers and busy highways of downtown Singapore surrounding Marina Bay.

Singapore’s economy contracted in the Q3

Singapore’s economy contracted 7% 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-annualized seasonally-adjusted basis, it grew 7.9%.

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

MTI said on Wednesday: “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 refer to the April and May period when the country went into lockdown with restrictions on movement and activities.

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

Taking into account the 0.3% decline in the first quarter, the economy contracted 6.7% in the first half of this year. 

Sectors affected by the contracted economy

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

The construction sector contracted 44.7% in the third quarter compared with the same period a year ago, extending the 59.9% 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 safety management measures for a safe restart,” MTI said in its statement.

The services-producing sector contracted 8% in the third quarter, compared with a year ago, improving from the 13.6% 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.

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