Singapore economy grows 7.1% in Q3, full-year GDP growth narrowed to about 7%: MTI

SINGAPORE: Singapore's economy grew by 7.1 per cent year-on-year in the third quarter of 2021, beating expectations, but still slower than the 15.2 per cent growth recorded in the previous quarter.

Analysts had expected a 6.5% increase for Q3, according to a Reuters poll.

In data released on Wednesday (Nov 24), the Ministry of Trade and Industry (MTI) also narrowed the GDP growth forecast for 2021 to about 7 per cent, from the previous 6 to 7 per cent. 

This is based on the performance of the Singapore economy in the first three quarters of the year, as well as the latest external and domestic economic developments, said the ministry. 

GDP growth in the first three quarters of 2021 came in at 7.7 per cent.

The Q2 figure of 15.2 per cent was "largely due to the low base" in the same quarter of 2020 when GDP fell by 13.3 per cent due to the Circuit Breaker measures put in place from Apr 7 to Jun 1, as well as the sharp fall in external demand during the COVID-19 pandemic. 

"These factors would also explain the strong year-on-year growth seen in the second quarter of 2021 for sectors such as construction, retail trade and food & beverage (F&B) services," said MTI. 

All clusters within the manufacturing sector, with the exception of the biomedical manufacturing cluster, expanded during the third quarter. 

The manufacturing sector grew by 7.2 per cent year-on-year, moderating from the 17.9 per cent growth in the previous quarter. 

The electronics and precision engineering clusters, in particular, continued to post "healthy growth" amid "robust" global demand for semiconductors and semiconductor equipment respectively. 

The construction sector rose by 66.3 per cent year-on-year, slowing from the 117.5 per cent growth in the previous quarter, as both public and private sector construction output rose. 

"The strong growth during the quarter was mainly because of low base effects given the slow resumption of construction activities after the Circuit Breaker period last year," said MTI. 

The wholesale trade sector grew by 5.9 per cent year-on-year, led by the machinery, equipment and supplies segment. This was in turn bolstered by the strong wholesale sales of electronic components, telecommunications equipment and computers. 

The retail trade sector grew by 0.7 per cent, supported by an increase in non-motor vehicle sales volumes, even as motor vehicle sales fell due to a reduction in Certificate of Entitlement (COE) quotas. 

Growth in the transportation and storage sector slowed to 8.2 per cent year-on-year. Within the sector, the air transport segment recorded strong growth, mainly due to an increase in air passengers handled from a low base in the same quarter in 2020. 

However, the water transport segment "grew marginally", due to slower growth in the volume of sea cargo handled at Singapore's ports, said MTI. 

The accommodation sector fell 4.1 per cent year, a reversal from the 15.8 per cent growth in the previous quarter. 

"The performance of the sector was weighed down by continued weak visitor arrivals due to travel restrictions, even though demand from the government for hotel rooms to serve as quarantine facilities provided some support to the sector," said MTI. 

The food and beverage sector (F&B) fell 4.2 per cent year on year, compared to the 36.9 per cent growth in the second quarter. 

The sector's performance was "adversely" affected due to tighter dine-in and event restrictions during the quarter, including dine-in services not allowed during the Phase 2 (Heightened Alert) period. 

"In particular, restaurants and food caterers saw a fall in sales volumes, even as the sales volumes of fast food outlets, and cafes, food courts and other eating places rose," said MTI. 

ECONOMIC OUTLOOK FOR 2021 

"Since the Economic Survey of Singapore in August, the global economy has performed broadly in line with expectations," said MTI. 

Domestically, travel and domestic restrictions have "continued to weigh" on the recovery of aviation- and tourism-related sectors such as air transport and the arts, entertainment and recreation sectors, as well as the F&B sector and retail trade sector. 

However, growth in sectors such as electronics, as well as finance and insurance, has been stronger than expected, bolstered by "robust" demand for semiconductors, and insurance and fund management services.

The recent easing of border restrictions on the entry of migrant workers from South Asia and Myanmar will also alleviate some of the ongoing labour shortages in the construction and marine and offshore engineering sectors, and support their recovery, said the ministry.