Roslan Rahman | AFP | Getty Images
Singapore – Singapore’s economic contraction slowed in the third quarter of this year, as according to official estimates released by the Ministry of Trade and Industry, allowing the country to resume more activities after partial lockout.
The ministry said that the Southeast Asian economy declined by 7% in the third quarter. The 6.8% year-over-year contraction forecast was slightly missed by analysts’ Reuters poll, and was slower than the revised 13.3% year-over-year decline in the previous quarter.
The ministry said that on a quarterly quarterly seasonally adjusted basis, Singapore’s economy declined by 7.9% in the July to September period. This is in contrast to the 13.2% contraction in the second quarter.
“Singapore’s economy outperforms after the circuit breaker in the third quarter after the economy opened in a phased manner, which was implemented between 7 April and 1 June 2020,” the ministry statement partially referenced in the country. The lockdown was aimed at preventing the spread of the virus.
Here’s how the various sectors performed in the third quarter:
- Construction reported the largest quarter-on-quarter growth of 38.7%. But on a year-on-year basis, the sector shrunk to 44.7%;
- Service-producing industries grew 6.8% in the quarter ended September, compared to the previous three months, but contracted 8% year over year;
- Manufacturing expanded 3.9% quarter-on-quarter and 2% year-on-year.
Central bank policy is stable
In a separate release, the country’s central bank – the Monetary Authority of Singapore – said it had halted its exchange rate-based monetary policy.
In March, the central bank made its most aggressive spontaneous move in years by lowering the appreciation rate of the Singapore Dollar exchange rate band and shifting its center down. The band measures the Singapore dollar against a basket of currencies.
MAS explained its latest policy decision on Wednesday, and said that while Singapore’s economy is recovering, sequential growth is expected to slow in the last quarter of 2020 and remain modest next year. It added that external demand remains cautious, while restrictions on cross-border travel continue – factors that are likely to reduce the country’s economic prospects.
The central bank said, “Singapore’s economy is expected to see a recovery by 2021, with rebalancing risk. However, the underlying growth momentum will be weak, and the negative production gap will gradually narrow in just one year, “The central bank said.
Singapore is estimated to contract between 5% and 7% this year compared to last year. Inflation is likely to remain low this year to record a change in MAH consumer prices between -0.5% and 0%.