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Singapore GDP Q4 2021

Singapore: Economic growth eases in Q4; strong growth overall for 2021

The economy expanded 5.9% year-on-year in the fourth quarter according to an advanced estimate, slowing slightly from Q3’s 7.1% growth as the favorable base effect continued to reduce. Meanwhile, in seasonally-adjusted quarter-on-quarter terms, the economy grew 2.6% in Q4, accelerating from the 1.2% expansion recorded in the prior quarter in a sign of strong underlying momentum. Overall, GDP rose 7.2% in 2021, thus rebounding sharply from the 5.4% contraction clocked in 2020 that had marked the worst result since Singapore became an independent country in 1965.

The slowdown in annual growth was predominantly driven by the services and construction sectors. Growth in the services sector came in at 4.6% year-on-year in Q4 (Q3: +6.2% yoy), while growth in the construction sector fell even further, tumbling to 2.0% in Q4 from 66.3% in the prior quarter. Contrastingly, growth in the manufacturing sector rose to 14.0% in Q4 from 7.9% in Q3, in a continued sign of robust demand for electronics and semiconductor products.

The outlook for 2022 appears positive, although most panelists see growth slowing from 2021’s solid outturn. While the reopening of global travel and Singapore’s region-leading vaccination drive are likely to support activity going forward, external headwinds and uncertainty regarding what impact the Omicron variant will have on regional growth are key risks to the outlook.

Barnabas Gan, economist at United Overseas Bank, is positive regarding the outlook, commenting:

“Into 2022, Singapore overall economic prognosis remains optimistic, especially given the strong end to 2021 as seen in today’s data. The manufacturing sector is expected to underpin growth given the growing demand for semiconductors and its related products underpinned Singapore’s electronics and precision engineering clusters. Moreover, we think that the tourism-related clusters such as retail, transport and hospitality will likely see further recovery especially as many global economies embark on reopening their respective borders on the back of the growing vaccination rates.”

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