In a continuation of the nation’s worst recession, economists expect Singapore’s economic contraction to lead into 2021 until the second half of the year, even in view of the slight pickup in the economy in Q4 of 2020 at 3.8%, an improvement to the 5.8% drop in Q3 and exceeding expectations by approximately a percentage point. As a whole, economic contraction year-on-year, at 5.8%, was lower than the forecasted 6-6.5%. Though vaccinations have begun both locally and internationally, as some time is needed for its effectiveness to be evinced, the re-opening of borders is unlikely to be imminent. Furthermore, the Covid-19 situation remains volatile given that new strains are still appearing - chances that the vaccines are ineffective against new strains remain very much present. Economists predict economic growth to range from 4.5% to 5.5% for 2021, within official forecasts of 4-6%.
Recovery has been and will continue to be pushed by the manufacturing sector, which expanded 9.5% year-on-year in 2020. The sector is supported by output expansions in electronics and biomedical manufacturing amongst others. Ratification of the Regional Comprehensive Economic Partnership (RCEP) and US President-elect Joe Biden’s favourable attitude towards multilateralism may also aid the growth of the sector. Positive outlooks have also been opined for the construction sector and non-trade sectors such as the finance and insurance sectors. Recovery in other sectors such as the hospitality sector has not been forthcoming given their natures, which have made them more susceptible to the impacts of Covid-19.
To date, the government has spent almost $100 billion over five different budgets to prevent massive unemployment and business failures.