Singapore was hit by COVID-19 again. The country had to impose another restriction to mitigate the case, causing a stumble in Q2. Economists, though, are optimistic that the economy could return to normal soon as global growth picks up and vaccination rates in Singapore rise.
Despite the stumble, Singapore still managed to show the best growth in more than a decade on a year-on-year basis in its economy.
Singapore: COVID-19 hits again, economy affected
Preliminary government data on Wednesday revealed that the economy for Singapore contracted a seasonally adjusted 2% in the second quarter of 2021. In comparison, Singapore recorded 3.1% growth in the preceding quarter.
The data from the Ministry of Trade and Industry also showed that Singapore’s GDP grew by 14.3% in the second quarter. This calculation was based on an annual basis.
In the second quarter of 2020, however, Singapore noted a 13.3% decline in its year-on-year GDP for the second quarter of 2020. During the period, Singapore had to undergo a long lockdown to prevent the coronavirus’ spread.
Singapore has been in a stricter lockdown since May due to a spike in COVID-19 cases. The restrictions eased only over the last few weeks after vaccinations pick up. weeks as vaccinations pick up.
In absolute terms, Singapore maintained its gross domestic product in the second quarter of 2021 to fall only by 0.9% from its pre-pandemic level in the same quarter of 2019.
Accordingly, Singapore managed to leverage its manufacturing sector 18.5% higher on year. The number benefitted through robust global demand for semiconductors and semiconductor equipment. Its construction sector further expanded by 98.8% from a year earlier when lockdown stopped most of the construction activities.
The Singapore dollar, though, lost its value. This year, Reuters noted a 2.5% loss in the currency. The reason behind the fall is most likely due to the US dollar that climber broadly. The resurgence of the COVID-19 virus has also been affecting Asian currencies negatively.
Singapore withstanding strong against COVID-19
Singapore’s government is confident that GDP could expand around 4% to 6% greater this year. It might even exceed the upper end of that forecast, officials continued, indicating how detrimental last year’s recession was.
An economist at Capital Economics, Alex Holmes, also voiced his high hopes in Singapore’s economic recovery. Holmes predicts Singapore to reach the top end of the government’s 4%-6% estimate in 2021 in its GDP growth.
“The economy stumbled in Q2 after the government reimposed restrictions in response to a spike in virus cases, but with new infections down and the government rolling back containment measures, the recovery should regain momentum over the coming months,” Holmes elaborated, as quoted from Reuters.
Additionally, Selena Ling of OCBC Bank also predicts the economy to return to its pre-COVID-19 levels as early as this year-end or early 2022. According to Ling, the quarter-on-quarter contraction Singapore experiences was just a temporary setback.
Singapore has also managed to remain the situation in the country under control. Almost 70% of its population has already received at least one dose of a vaccine.
Meanwhile, its neighbours like Thailand, Malaysia and Indonesia, are struggling with their economic state amidst the suffocating COVID-19.
Read also: Earning Money is The Main Life Priority for Singapore Employees
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