Singapore economy is expected to grow a 6% this year

Singapore economy is expected to grow a 6% this year

The Singapore economy, which marked its worst recession in 2020, may be in for a better-than-expected recovery this year on the back of strengthening external demand.

The Monetary Authority of Singapore on Wednesday said the country’s gross domestic product “could exceed 6 percent” in 2021.

Barring a setback in the Singapore economic recovery or a surge in locally transmitted COVID-19 cases.

Near-term economic prospects have brightened on the back of strengthening external demand, said the central bank in its latest half-yearly macroeconomic review.

“There are upside risks to growth such as from a stronger-than-anticipated upturn in the global electronics cycle, but these are accompanied by downside risks pertaining to the mutation of the virus and efficacy of vaccination,” it wrote.

Uneven recovery in Singapore economy

The Singapore economy contracted by an unprecedented 5.4 percent after a coronavirus-hit 2020 and expectations are for a gradual recovery this year.

Preliminary data for the first quarter of 2020 showed a turnaround after three quarters of contraction, with strong manufacturing activity aiding a 0.2 percent expansion. 

The MAS, however, warned that growth is likely to “remain disparate across sectors”.

“The robust GDP estimate belies continued unevenness in the dispersion of the recovery and is accompanied by elevated uncertainty,” it said.

Strong growth is expected for the manufacturing sector, which has been a bright spot over the past year.

As the robust upswing in the global technology cycle continues to boost electronics production.

On the other hand, prospects for the worst-hit sectors, including air transport and accommodation, have “deteriorated somewhat” amid a global surge in COVID-19 infections and the emergence of more contagious strains.

These have diminished hopes for a substantial reopening of international borders in the near term, said the central bank.

Across other sectors, construction activities should be supported by a backlog of projects and an anticipated pick-up in demand this year.

Although manpower shortages and rising material costs are challenges in the near term.

Source: Channel News Asia

Manufacturing in Singapore grew in December

Manufacturing in Singapore grew in December

Singapore’s manufacturing output rose 14.3 percent year-on-year in December, beating estimates and bringing overall growth for 2020 to 7.3 percent.

Economists polled by Reuters had forecast an 11.5% increase in December.

December’s industrial production was boosted by electronics, chemicals, and precision engineering. Excluding biomedical manufacturing, output increased 19.8 percent in December, the Economic Development Board (EDB) said on Tuesday (Jan 26).

The growth in December follows a revised 18.7 percent expansion in November, instead of the 17.9 percent previously reported.

On a seasonally adjusted month-on-month basis, manufacturing output increased 2.4 percent in December. Economists had expected a 0.6 percent contraction. Excluding biomedical manufacturing, output grew 8.2 percent month-on-month.

Electronics boost

Electronics manufacturing output soared 41.8 percent in December compared to the same month in 2019, with a 51 percent expansion in the semiconductor segment leading the charge, supported by 5G markets and helped by a low production base from a year before.

The computer peripherals and data storage segment also grew 9.3 percent.

There was an 8.7 percent decrease in output in the other electronic modules and components segment, however, as well as a 6.7 percent decline in infocomms and consumer electronics.

Overall, the output of the electronics cluster grew by 11.9 percent in 2020 compared to 2019.

In the chemicals cluster, production expanded by 12.3 percent year-on-year in December, with all segments recording output growth except petroleum.

Petrochemicals and specialties segments grew by 17.9 percent and 16.9 percent respectively from a low base a year earlier attributed to plant maintenance shutdowns.

The other chemicals segment saw an increase of 14.1 percent, boosted by higher production of fragrances.

The chemicals cluster’s output fell by 1 percent overall in 2020, however.

Output also grew for precision engineering in December, up 11 percent compared to a year ago.

Manufacturing and machinery growth

The machinery and systems segment grew 12.6 percent with a higher output of semiconductor equipment and measuring devices.

The precision modules and components segment rose 6.3 percent due to increased production of the optical instrument and metal precision components.

Output in the precision engineering cluster expanded by 10.6 percent overall in 2020.

General manufacturing cluster also saw growth in December, with a 5.9 percent increase in output year-on-year.

The food, beverage, and tobacco segment was the best performer, growing by 13.6 percent with higher production of beverage products and milk powder.

The printing segment also grew by 1.2 percent but miscellaneous industries fell 0.3 percent due to lower output of construction-related products. General manufacturing contracted by 11.3 percent overall in 2020.

Source: CNA

Singapore’s economy shrank 5.8% during the pandemic

Singapore’s economy shrank 5.8% during the pandemic

Singapore’s economy shrank a record 5.8 percent in a pandemic-hit 2020, preliminary data showed on Monday, although most industries saw some improvement in the fourth quarter of the year as COVID-19 restrictions were eased.

This is Singapore’s first annual contraction since 2001, and its worst recession since independence. 

Singapore has been hit hard by the COVID-19 pandemic amid movement restrictions and border closures, with construction, aviation, and tourism among the most affected.

The Government had estimated that Singapore’s gross domestic product (GDP) would contract between 6 percent and 6.5 percent in 2020.

GDP shrank 3.8 percent on a year-on-year basis in the last three months of the year, an improvement from the 5.6 percent drop in the third quarter, advance estimates by the Ministry of Trade and Industry (MTI) showed on Monday (Jan 4).

On a quarter-on-quarter seasonally adjusted basis, Singapore’s GDP grew by 2.1 percent in the final quarter of 2020, following the 9.5 percent expansion between July and September.

Singapore entered a “circuit breaker” period in April to stem the spread of the COVID-19 outbreak, shutting down non-essential businesses.

It exited the circuit breaker period in June, gradually reopening the economy, and is now in Phase 3. It has also started a vaccination program, beginning with healthcare workers.

The Government has spent about S$100 billion on virus-related relief to support households and businesses. It expects Singapore to return to growth this year but has cautioned that the recovery would be gradual.

Source: Channel News Asia.

It might interest you: World trade forecast by the WTO: part 2

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.

CEOs, Singapore, supply chain

CEOs of Singapore worry about supply chain

Almost 72% of Singaporeans CEOs have re-evaluated their firms’ purpose to address stakeholders’ needs.

The CEOs of Singaporean companies are most concerned about supply chain risk and a return to territorialism as the top threats to their organizations’ growth over the next three years, according to a KPMG report.

Given the country’s open economy, supply chain risk, and territorialism rank as the two top threats to businesses whereas in the global environment, talent risk took first place.

Almost three-fourths (72%) of CEOs in the State-City say that they re-evaluated their company’s purpose in order to better address the evolving needs of their stakeholders whilst 80% want to lock in the climate change gains they have made during this period.

They have also become more conservative than CEOs globally, with less than a quarter (24%) expecting to see their company’s earnings grow at more than 2.5% yearly over the next three years.

On the other hand, they have also heavily invested in technology during the lockdown period, with seven in 10 (72%) seeing their new digital business models accelerate during the pandemic. The biggest advancements have been in the digitization of operations and the creation of a next-generation operating model, where 56% say that progress has put them years ahead of where they would have expected to be right now.

Almost two-thirds (64%) are likely to put more capital investment into technology than people.

CEOs plan to improve ESG

In addition, 72% stated that they have had to re-evaluate their organizations’ purpose as a result of the pandemic, and 80% saying they feel a stronger emotional connection to their organizations’ purpose since the crisis began.

Mitigating climate risks have also evolved into a personal responsibility as 60% feel that their ability to manage climate-related risks will impact their role in the organization, ultimately determining whether they keep their jobs over the next five years.

This development has put ESG near the top of the agenda for CEOs in Singapore and 72% of them have shifted their focus towards the social component of ESG.


Tharman: Singapore must remain open to investments

Senior Minister Tharman Shanmugaratnam said that Singapore’s future rests on its role as a hub in sectors such as manufacturing, finance and logistics. Stressing that staying open is vital to maximizing opportunities for Singaporeans.

Minister Tharman also warned that the Covid-19 pandemic may lead to a “wipeout” of a significant number of small- and medium-sized enterprises (SMEs) as many of these companies have been battered by the crisis.

Minister Tharman, who is also Coordinating Minister for Social Policies, was speaking during a dialogue at the Singapore Summit, an annual forum bringing together leaders from around the world to discuss global trends in business, finance and geopolitics.

The dialogue was hosted by Mr Ho Kwon Ping, executive chairman of resort group Banyan Tree Holdings. It touched on topics such as the impact of Covid-19 on existing global trends, the tensions between the United States and China, and the future of Singapore’s status as an economic hub.

Elaborating on the need for Singapore to stay open, Minister Tharman said that the country cannot rely on its domestic economy for growth.

“If we are a middling business center or if we think we can get growth out of a domestic economy, not only will we not be able to grow opportunities, but most Singaporeans will leave the place… So it’s clearly not an option.”

To remain successful and competitive as an economic hub, Singapore should not just remain open to trade and investments, but it must also continue to be open to flows of people.

This requires continuous work, he said, and involves trust between the Government and the people, as well as having reliable systems and strong national education systems to ensure that these objectives can be achieved.

Minister Tharman: it wouldn’t be socially sustainable

However, Senior Minister Tharman said that it would not be “socially or politically sustainable” for a country to be “blindly open” to foreigners.

The key is for the Government to manage the flows of people and ensure that opportunities are created for all through this openness, he added.

He then laid out the ways that the Government should achieve this. Firstly, there must be opportunities for Singaporeans to develop at every skill level.

This includes ensuring that Singaporeans are able to adapt and develop adjacent skills in order to switch to new sectors.

The country must also strive to encourage firms to anchor their regional and global business here and attract the best international teams with both foreigners and Singaporeans.

The Government should ensure fair hiring and promotion practices — something that it has taken even more seriously because of the present economic downturn, he said.

Lastly, firms should also be mindful of the need for “adequate diversity of nationalities, even among the foreigners who are with us”, he said.

“Avoid significant concentrations of one nationality, and that, too, is something that we are talking to firms about.”

The overall number of foreigners relative to residents here would also need to be controlled, Minister Tharman said. “If you want to preserve openness to the top-tier talent and entrepreneurs, you have to control the overall numbers and make sure that the broad middle in our society and those in the lower-income level have opportunities and face fair competition.”

While meeting to discuss issues in the workplace, a young female professional shakes the male human resources representative's hand and smiles. The conversation is taking place in an office and the female employee sits on a comfortable sofa.

Hiring practices will be review by the MOM

Hiring practices of companies will be review by the Ministry of Manpower , as well as those whose Employment Pass and S Pass workforce are “overly concentrated” from a single foreign nationality source, said Manpower Minister Josephine Teo.

The hiring practices review comes amid a heightened sense of insecurity about jobs, in an economy battered by the COVID-19 pandemic.

Announcing the review of hiring practices in Parliament on Tuesday Sep 1, Mrs Teo said MOM will work with other agencies to actively intervene and help such companies reshape their workforce profiles.

The ministry will also engage the human resources community to “do more”, she added.

Mrs Teo was responding to several Members of Parliament, who had posed the issue of job competition between Singaporeans and work pass holders.

She pointed out that work pass policies have been regularly adjusted, slowing down the growth of Employment Pass and S Pass holders.

With COVID-19, the number of Employment Pass and S Pass holders have also come down sharply, she said, adding that this group of workers dropped by 22,000 between January and July this year.

Highest rate level of unemployment in a decade

Singapore’s overall unemployment rate has risen to its highest level in more than a decade, with retrenchments more than doubling because of the COVID-19 pandemic.

In the second quarter, retrenchments more than doubled to 6,700, from 3,220 in the previous quarter.

Mrs Teo said that MOM actively monitors retrenchment exercises, and that the vast majority have so far been conducted fairly and responsibly.

“By and large, there has also not been a weakening of the Singaporean core,” she said.

Nevertheless, these “reassuring observations”, said Mrs Teo, MOM will work with businesses and unions to “advance sound practices” – such as by updating the Tripartite Advisory on Managing Excess Manpower and Responsible Retrenchment, or through the Fair Retrenchment Framework proposed by the National Trades Union Congress (NTUC).

Government state that it is necessary to chart a new path

The Singaporean government assures that the city-state will never be the same again and that it is necessary to prepare to chart a new path.

In a press conference, the Trade and Industry Minister Chan Chun Sing, assured that Singapore will never be the same after Covid-19, and that we must prepare to chart a new path.

“If we wait it out, we will likely be in worse shape than we are now,” said Minister Chan Chun Sing.

The government representative added that the city-state must now begin to build a new economic model and create more and better job opportunities for people.

The Singaporean Trade and Industry Minister described the situation as painful and considered that recovery amid recurring waves of infection can take time.

These statements came amid the announcement that the economy contracted 6.7 percent in the first half of this year.

He also highlighted that this situation is different from that experienced in the Asian financial crisis in 1998 or in the global financial crisis of 2009.

The new World

The Trade and Industry Minister emphasized that in the last 50 years the geopolitical environment has allowed Singapore to prosper and that today great changes have happened in the world.

He noted that currently competition between major powers influences not only politics, but also trade, technology and security.

At the same time, Chan Chun Sing said that global companies are reorganizing their production and supply chains, evaluating the possibility of a regional headquarters.

Which in his opinion means that, while new investments can go to Singapore, existing ones can migrate to other countries.

So he warned that if they don’t adapt quickly to the changes that are being generated, they may be more affected.

Finally, he said that jobs have changed and remote work means that those in other countries can do Singaporeans’ work from their homes.