Opening remarks by PS Mr Gabriel Lim for Economic Survey of Singapore 2020

1 Good morning and welcome to this virtual media conference.

2 Details of Singapore’s economic performance and outlook are contained in the press release issued earlier. Let me highlight a few key points.

3 In the fourth quarter of 2020, the Singapore economy shrank by 2.4 per cent on a year-on-year basis, an improvement from the 5.8 per cent contraction in the third quarter. For 2020 as a whole, the Singapore economy contracted by 5.4 per cent, a reversal from the 1.3 per cent growth recorded in 2019. This represented the worst full-year recession since Singapore’s independence, and was a direct result of the economic fallout from the COVID-19 pandemic.

4 Most sectors of the economy, particularly those related to tourism and aviation, contracted in 2020. However, there were also bright spots. These included the manufacturing, finance & insurance and information & communications sectors, which recorded healthy expansions.

5 Let me now turn to the economic outlook for 2021.

6 Since the Economic Survey of Singapore media briefing in November 2020, there has been further progress in vaccine development and deployment globally, with the vaccines being approved and rolled out in many countries. Although the speed of vaccine deployment varies, advanced economies like the US and Eurozone may reach population immunity by the second half of this year, which should in turn spur their economic recoveries. On the other hand, the growth outlook of some regional economies has weakened due to new waves of infections which have necessitated the re-imposition of lockdowns and restrictions. On balance, as the positive developments in the key external economies broadly offset the negative ones, Singapore’s external demand outlook remains largely similar compared to three months ago.

7 At the same time, significant uncertainties and risks in the global economy remain. A key uncertainty pertains to the course of the pandemic and the trajectory of the global economic recovery. How these pan out in the year ahead depends on factors such as the adequacy of vaccine supplies, the speed of vaccine deployment, the possible emergence and spread of new strains of the virus, among others. Details of these and other uncertainties closely monitored by MTI are contained in the press release.

8 Domestically, Singapore’s COVID-19 situation remains under control and our vaccination programme is also underway. However, the global surge in COVID-19 cases and the emergence of more contagious strains of the virus, have hampered the recovery of air travel and slowed the pace of border re-openings around the world.

9 Against this external and domestic backdrop, the Singapore economy is projected to see a gradual recovery in 2021, with GDP not expected to return to pre-COVID levels until the second half of the year at the earliest. The pace of recovery is also expected to remain uneven across sectors.

 · Outward-oriented sectors such as manufacturing and wholesale trade are projected to benefit from the pickup in external demand.
 
 · However, tourism- and aviation-related sectors are likely to see a weaker recovery due to the slower-than-anticipated lifting of global travel restrictions, as well as sluggish travel demand.  These sectors are not expected to return to pre-COVID levels even by the end of the year.
 
 · Similarly, while consumer-facing sectors such as retail and food & beverage services are expected to recover this year, they are not likely to return to pre-COVID levels by end-2021 because of the slower recovery in visitor arrivals, as well as capacity constraints arising from safe management measures.
 
 · Lastly, the construction and marine & offshore engineering sectors are also projected to see a slow recovery over the course of the year.

10 Taking into account the developments in the global and domestic economic environment, MTI has decided to maintain the GDP growth forecast for 2021 at “4.0 to 6.0 per cent”.

11 Together with my panel members, I am now happy to take your questions.