The COVID-19 pandemic caused massive global economic disruptions in 2020. Singapore was not spared as the economy recorded its worst full-year recession since independence. During the year, the economy had to grapple with both demand- and supply-side shocks, such as a fall in external demand for goods and services produced in Singapore caused by the economic slowdown in major economies and global travel restrictions, supply chain disruptions, as well as the implementation of the Circuit Breaker (CB) measures domestically from April to June 2020.
Across sectors, the economic impact of COVID-19 was felt through different transmission channels. Consequently, their economic performance, including their recovery post-CB, was variegated. For example, while the proxy indicators for external demand had either surpassed or were close to pre-pandemic levels by the fourth quarter of 2020, air passengers and tourist arrivals remained significantly lower than prepandemic levels as at end-2020.
Furthermore, significant risks in the global economy remain. While Singapore’s vaccination programme is well underway, there is uncertainty over how the COVID-19 pandemic will evolve around the world given the emergence of new strains of the virus and difficulties in vaccine rollouts globally.
Overall, Singapore’s GDP is projected to gradually recover and expand by 4.0 to 6.0 per cent this year, with GDP not likely to return to pre-COVID levels until the second half of the year at the earliest. The pace of recovery is also expected to be uneven across sectors. For instance, while outward-oriented sectors are likely to benefit from the pickup in global economic activity, activity levels in tourism- and aviation-related sectors are projected to remain below pre-pandemic levels even by the end of 2021.
The views expressed in this paper are solely those of the authors and do not necessarily reflect those of the Ministry of Trade and Industry or the Government of Singapore.
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