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On April 5, 2021, storm clouds gather over the skyline of Singapore’s central business district. Edgar Su/REUTERS Reuters, SINGAPORE, July 14 – Singapore’s economy slowed in the second quarter due to fresh COVID-19 outbreaks, but it grew at its strongest annual rate in nearly a decade as the city-state recovered from last year’s coronavirus-induced slump. According to preliminary official data released on Wednesday, the economy increased 14.3 percent year over year in the second quarter, compared to 14.2 percent predicted by economists in a Reuters survey. In the second quarter of 2020, GDP fell by a record 13.3 percent year on year. For the majority of that time, the country was under lockdown to prevent the spread of the coronavirus. The GDP shrank by 2% quarter-on-quarter seasonally adjusted in the second quarter of 2021, reversing the 3.1 percent expansion in the previous quarter, according to a statement from the Ministry of Trade and Industry. After an increase in COVID-19 instances in May of this year, Singapore enacted stricter limits on public meetings. It has been loosening them in recent weeks as immunizations have increased. “The economy fell in Q2 when the government reimposed restrictions in response to a jump in virus cases,” Capital Economics’ Alex Holmes said. “However, with new infections down and the government pulling back containment measures, the recovery could regain steam in the coming months.” In absolute terms, GDP in the second quarter of 2021 was 0.9 percent lower than it was in the second quarter of 2019 before the pandemic. Strong global demand for semiconductors and semiconductor equipment helped the manufacturing sector grow 18.5 percent year over year. When compared to a year ago, when most construction activity were halted due to the lockdown, the construction industry grew by 98.8 percent. The Singapore dollar has lost approximately 2.5 percent this year, the most of it in the last month as the US dollar has risen widely and Asian currencies have been pulled down by the virus’s reappearance. After the data on Wednesday, it didn’t alter much. The government anticipates GDP to grow by 4% to 6% this year, while it is possible that growth may exceed the high end of that range. Last year, the bellwether economy experienced its worst slump. OCBC Bank’s Selena Ling described the quarter-on-quarter contraction as a “temporary setback.” By the end of this year or early in 2022, she expects the economy to be back to pre-COVID-19 levels. Vaccinations are becoming more popular around the world, and Singapore has vaccinated approximately 70% of its people with at least one dose of a vaccine. However, many of its neighbors, notably Thailand, Malaysia, and Indonesia, are experiencing new outbreaks, which might have economic ramifications for the city-state, such as complicating its efforts to open its borders. At its most recent meeting in April, the central bank maintained its lenient monetary policy. In mid-October, the next policy review is due. “There will most likely be a shift away from being overtly dovish,” OCBC’s Ling said. Tom Westbrook contributed additional reporting, while Stephen Coates and Jacqueline Wong edited the piece. The Thomson Reuters Trust Principles are our standards./nRead More

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