Singapore's economy has turned a corner and will rebound next year, though the recovery is expected to be gradual.
It is still poised to grow by the fastest pace in a decade, helped by a low base, the Ministry of Trade and Industry (MTI) said yesterday.
In its maiden forecast for next year, MTI said the economy may expand by 4 per cent to 6 per cent - the most since 2011, when it grew by 6.3 per cent.
However, gross domestic product (GDP) will probably not return to pre-Covid-19 levels until the end of next year, it said while presenting the Economic Survey of Singapore.
Trade and Industry Minister Chan Chun Sing said that while the growth outlook may have improved, there was still much work to be done. "While we are turning the corner, we still have a long way to go in our economic recovery," he said.
Meanwhile, some of the gloom brought on by the pandemic is being dispelled. There were signs that the continued expansion of trade and manufacturing, and a gradual recovery in construction-and tourism-related sectors, would spur the rebound.
For this year, the economy will contract by 6.5 per cent to 6 per cent - less than the previous estimate of a 7 per cent to 5 per cent shrinkage.
The full-year estimate was narrowed after the economy did better in the third quarter than expected. It expanded by 9.2 per cent on a quarter-on-quarter seasonally adjusted basis in the July-September period, a turnaround from the 13.2 per cent decline in the second quarter, the Economic Survey showed.
The Government will continue to support businesses and workers to pivot and adapt to the new realities of a Covid-19-stricken world, said Mr Chan.
"If we are able to help our businesses and workers make the necessary adjustments and pivot quickly, I have every reason to believe that we will emerge in a stronger position than before," he said.
Mr Gabriel Lim, Permanent Secretary for Trade and Industry, said the improved showing in the third quarter came as activities resumed after the circuit breaker ended on June 1. "While growth is expected to rebound from the low base this year, our economic recovery is expected to be gradual, with GDP not likely to return to pre-Covid levels until the end of 2021," he noted.
"Furthermore, there remains uncertainty over how the Covid-19 situation will evolve globally in the year ahead, which will de-pend in part on the progress in vaccine development, production and distribution."
The forecast of a return to positive growth next year is based on an improved outlook for trade-related services, while the manufacturing sector continues to march on, boosted by robust electronics and semiconductor demand.
Aviation-and tourism-related sectors are projected to see a gradual recovery in visitor arrivals, which in turn will benefit consumer-facing retail and food service sectors.
Still, economic activity in these sectors is not likely to return to pre-Covid-19 levels, even by end-2021.
Construction may recover, although safe management measures will keep the sector subdued.
Mr Kenny Tan, a director at the Ministry of Manpower, said employers are likely to take a cautious view towards fresh hiring.
Thus, unemployment will likely remain at elevated levels, even as GDP growth rebounds, he added.