Export of services expected to see continued growth this year

Singapore's services exports are expected to continue expanding this year amid the easing of border restrictions and higher global demand in line with post-pandemic recovery.

Services exports took a longer time to recover to pre-Covid-19 levels, compared with recovery following the 2003 severe acute respiratory syndrome (Sars) crisis and the 2008-2009 global financial crisis.

Export of services grew 7.1 per cent year on year in the first quarter, due to the rise in other business services exports, travel receipts, and receipts from the charges for the use of intellectual property, trade agency Enterprise Singapore noted in a release yesterday.

Services exports include financial services, maintenance and repair services, and travel services.

Overall, services exports rebounded last year, recording a 6.7 per cent increase after shrinking 1.6 per cent in 2020 with the onset of the Covid-19 pandemic.

The recovery was primarily supported by exports of other business services, transport services, and charges for intellectual property use despite continued challenges for the export of travel services.

The impact of the pandemic on Singapore's services exports was detailed in an article in the Ministry of Trade and Industry's quarterly economic survey published yesterday.

The report noted that compared with past crises, the impact of the Covid-19 pandemic on Singapore's services exports was larger and more prolonged.

Services exports took seven quarters to return to pre-pandemic levels, compared with just two quarters after the onset of Sars and six quarters after the start of the global financial crisis.

The sector saw its sharpest decline in the immediate quarter after the start of the Covid-19 pandemic, falling 16.9 per cent in the second quarter of 2020 compared with the previous three-month period.

This was compared with a 5.2 per cent dip one quarter after the onset of the global financial crisis and an 11.9 per cent decline seen one quarter after Sars broke out.

The 1.6 per cent contraction in services exports seen in 2020 came after services exports recorded an 8.9 per cent per annum growth on average between 2010 and 2019, outpacing the growth of merchandise exports.

This decline was driven largely by the plunge in the export of travel services, given border closures due to the pandemic.

Travel services exports - most badly hit by the pandemic - have remained weak despite recovery in other segments, recovering to just 27.1 per cent of the pre-pandemic level by the first quarter of this year.

In contrast, other categories such as charges for the use of intellectual property and telecommunications, computer and information services expanded during the pandemic.

These export categories were relatively less affected by Covid-19 as many of the services could be delivered remotely to clients, rendering them more resilient to the impact of global border restrictions, the report noted.

Additionally, the pandemic catalysed the push for digital transformation among enterprises in the region, which helped to support Singapore's exports of telecommunications, computer and information services, while financial services exports benefited from the shift to online business platforms.

The report highlighted that, over the longer term, there will be many new opportunities for the Republic's services exports, especially as economic growth and the rising middle class in China and Asean lead to an increase in demand for services.

At the same time, it is important for Singapore to continue to develop its capabilities as a business and logistics hub, so that it remains well positioned to serve the region's demand for services, it added.