Singapore: 2020 GDP seen contracting 6.5% - UOB

Economist Barnabas Gan and Senior FX Strategist Peter Chia at UOB Group assessed the latest GDP figures in Singapore.

Key Quotes

“Singapore’s 3Q20 GDP contracted 7.0% y/y (+7.9 q/q sa), according to the advance estimates by MTI. With the latest GDP print, Singapore’s economy fell by 6.9% in the first three quarters of 2020.”

“Despite seeing three consecutive quarters of y/y contraction, the latest GDP print at -7.0% (+7.9% q/q sa) is significantly better compared to 2Q20 GDP which clocked -13.3% y/y (-13.2% q/q sa).”

“The overall GDP decline was dragged by sustained softness in the construction and services sector.”

“The manufacturing sector was a key bright spot, expanding at 2.0% y/y in 3Q20 and compared to a contraction of 0.8% y/y in 2Q20.”

“The latest GDP data in 3Q20 further confirms that Singapore’s economy has been improving since the trough in 2Q20. However, the pace of the recovery has been hampered by the continued softness in the construction sector amid a non-existent tourism demand which further dragged the services sector. As such, we downgrade Singapore’s full-year GDP growth to -6.5% in 2020, down from our initial outlook of -5.0%. Should the pace of recovery be sustained into 2021, the MAS will likely keep policy-parameters unchanged in its April 2021 meeting.”