Singapore: 2020 GDP seen contracting 6.0% - UOB

Economist at UOB Group Barnabas Gan reviewed the latest GDP results in Singapore.

Key Quotes

“Singapore’s 3Q20 GDP improved from the previous advanced estimates by MTI, according to the latest data. 3Q20 GDP fell 5.8% y/y (+9.2% q/q sa), up from the advanced estimates at -7.0% y/y (+7.9% q/q sa). Given the better-than-estimated numbers, Singapore’s economy contracted 6.5% in the first three quarters of 2020, up from the previous -6.9% print based on MTI’s advanced estimates.”

“The improved GDP data was solely driven by a strong uptick in manufacturing momentum in 3Q20. Singapore’s manufacturing growth clocked a strong 10.0% y/y in 3Q20, up from the previous advanced estimates which pencilled it at merely +2.0% y/y.”

“Despite seeing three consecutive quarters of y/y contraction, the latest GDP print suggests that Singapore’s economy may perform better into 2021.”

“We recognise that the global backdrop will likely be favourable for Singapore’s economy. This includes the signing of the RCEP which Singapore will likely benefit immensely, while US president-elect Joe Biden may take on a more constructive and multilateral approach in trade with other countries (even though he is not expected to reverse the trade restrictions implemented on China by President Trump).”

“We pencil full-year GDP contraction of 6.0% in 2020, down from our previous estimate of - 5.5%, as Singapore’s construction and services sectors (which accounts for approximately 80% of Singapore’s GDP) are likely to continue to underperform in 4Q20. This is due to the slow restart in the construction sector amid COVID-19 concerns amongst Singapore’s migrant workers’ population amid the non-existent tourism in 4Q20.”