SINGAPORE (Reuters) – Singapore endured its worst recession on record in 2020 due to the COVID-19 pandemic, although the economic contraction eased in the fourth quarter as more coronavirus-related restrictions were lifted in the city. slowing down, putting the economy on a slow and precarious recovery path.
The financial and transport hub was hit hard last year by local virus-related restrictions, border closures around the world and a global economic downturn.
Preliminary data on Monday showed the bellwether economy shrank 5.8% in 2020, slightly better than official forecasts for a contraction of 6.5% to 6%. The government has previously said it expects gross domestic product (GDP) to grow by 4% to 6% this year.
The city-state has eased most of its coronavirus rules, but its borders remain largely closed. The country kicked off its COVID-19 vaccination program last week, with the government keen to help open up more of the economy in a country reliant on travel and trade.
“The recovery in 2021 is likely to continue to be rather slow,” said Brian Tan, a Barclays regional economist. We’re reopening our borders faster.”
GDP contracted 3.8 percent year-on-year in the October-December period, an improvement from the 5.6 percent decline in the third quarter, the Trade and Industry Ministry said in a statement. Economists polled by Reuters expect the economy to contract by 4.5%, based on the median of their forecasts.
From October to December, on a seasonally adjusted basis, GDP grew 2.1 percent month-on-month, a slowdown from the 9.5 percent growth in the third quarter.
The Singapore dollar edged up to S$1.3203 after the data, its strongest since April 2018.
Prime Minister Lee Hsien Loong said last week that while the economy showed signs of stabilizing, the recovery would be uneven and economic activity would likely remain below pre-COVID-19 levels for some time.
Singapore’s government has spent about S$100 billion ($75.45 billion), or 20% of GDP, on virus-related relief to support households and businesses.
The central bank left monetary policy unchanged at its last meeting in October, saying its accommodative stance would remain appropriate for some time.
“We don’t expect any change in monetary policy for now,” said Jeff Ng, senior financial strategist at HL Bank. “The main force of fiscal policy will remain in place to support the economic recovery in 2021.”
Reporting by Lin Chen and Aradhana Aravindan; Additional reporting by Tom Westbrook; Editing by Sam Holmes