ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintIcon Twitter
Economy

Singapore ekes out 0.2% GDP growth in Q1 with COVID in check

Chips and other exports drive manufacturing rebound as vaccinations accelerate

Singapore's GDP shrank 5.4% in 2020, its worst performance since independence in 1965.   © Reuters

SINGAPORE -- The Singaporean economy grew 0.2% in the January-March quarter from a year earlier, preliminary data released on Wednesday shows, marking the first growth in a year after battling through the COVID-19 pandemic.

Following a 2.4% contraction in the October-December quarter, the latest data highlights the city-state's continued recovery from the worst of the crisis as it speeds up vaccinations.

The manufacturing sector grew by 7.5%, while the services sector contracted by 1.2% and the construction industry shrank by 20.2%.

"Growth of the sector was supported by output expansions in the electronics, precision engineering, chemicals and biomedical manufacturing clusters," the Ministry of Trade and Industry said of manufacturing.

The preliminary figure is an estimate largely based on the performance of the first two months of the quarter. In January and February, Singapore's benchmark non-oil domestic exports grew 12.7% and 4.2%, respectively, suggesting steady demand for the manufacturing sector which accounts for about 20% of the economy.

"The economy should continue to recover well over the coming quarters," Alex Holmes, an economist at Capital Economics, said in a note, citing strong export demand for semiconductors and pharmaceuticals.

But Holmes also warned that travel restrictions are the main headwind, saying, "Persistent weakness in the aviation and retail and hospitality sectors will hold back the economy."

Last year, Singapore's gross domestic product shrank 5.4% from 2019, the worst performance since independence in 1965. This was mainly due to global travel restrictions hitting the trade and air hub, as well as the monthslong closure of nonessential businesses.

Due to strict border controls and safe distancing practices, COVID-19 is largely under control within the country, with daily new confirmed cases remaining at zero or in the single digits over the past few months.

Singapore in late December also became one of the first Asian countries to start vaccinations against the disease, using the Pfizer-BioNTech shots. It has since introduced Moderna's vaccine as well.

According to the statistics website Our World in Data, 1.13 million people -- about 19% of Singapore's total population -- had received at least one vaccine dose as of April 6. That is the largest proportion of a population among the region's key economies.

Singapore's GDP is projected to grow 6.1% this year, according to a March survey of economists conducted by the Japan Center for Economic Research and Nikkei.

But while the economy is on track for a recovery, the Monetary Authority of Singapore on Wednesday kept its monetary policy unchanged.

"The Singapore economy will grow at an above-trend pace this year, but the sectors worst hit by the crisis will continue to face significant demand shortfalls," the central bank said in its biannual monetary policy statement.

The city-state's monetary policy is based on exchange rates, whereby the Singapore dollar is managed against a basket of major trade partners' currencies. In March last year, the central bank eased its policy to help sustain the economy.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more