On a seasonally adjusted quarterly basis, Singapore’s economy rebounded 7.9% between July and September, the ministry said. This is a reversal of the 13.2% contraction in the second quarter.
“The improvement in the performance of Singapore’s economy in the third quarter came due to the gradual reopening of the economy following the circuit breaker which was implemented between April 7 and June 1, 2020,” said the ministry’s statement, referring to the lockdown in the country aimed at mitigating the spread of the coronavirus.
Here’s how the different sectors fared in the third quarter:
- Construction posted the strongest quarterly growth of 38.7%. But on an annual basis, the sector has shrunk by 44.7%;
- Service industries grew 6.8% in the quarter ended September from the previous three months, but contracted 8% year over year;
- Manufacturing grew 3.9% quarter on quarter and 2% year on year.
The central bank keeps its policy stable
In a separate statement, the country’s central bank – the Monetary Authority of Singapore – said it had kept its monetary policy based on the exchange rate on hold.
In March, the central bank made one of its most aggressive easing moves in years by flattening the rate of appreciation of the Singapore dollar exchange rate band and shifting its center down. The strip measures the Singapore dollar against a basket of currencies.
The MAS explained its latest policy decision on Wednesday and said that although Singapore’s economy is recovering, sequential growth is expected to slow in the last quarter of 2020 and remain modest next year. He added that external demand has remained cautious, as restrictions on cross-border travel have continued – factors that could weigh on the country’s economic outlook.
“Singapore’s economy is expected to recover in 2021, along with the risk of disinflation declining. However, the underlying growth momentum will be weak, and the negative output gap will narrow only slowly in the coming year, ”the central bank said.
Singapore is expected to contract 5% to 7% this year compared to last year. Inflation is expected to remain low, with the MAS forecasting consumer prices to fluctuate between -0.5% and 0% this year.