The future of Singapore’s economic sector
Singapore has a robust economy that attracts thousands of global investors and talents to its shores every year. From its highly modernized infrastructure to its pro-business environment that became the envy of the world, this small country of 5.8 million has become a major financial hub in the Asia Pacific region.
Then came 2020 and COVID-19 has devastated the world’s economy. With unemployment rates at an all-time high and recessions looming over advanced economies and emerging markets alike, it is safe to assume that the recovery process for most countries would be a long and arduous one. But how about Singapore? Will the Lion City see any signs of positive growth in 2021?
Let’s start with some positive news, according to the Monetary Authority of Singapore, economists have recently revised their projection for Singapore’s economy next year. At first, they forecasted economic growth of 4.8% around June but after a recent survey, they came to the conclusion that Singapore will be expecting an average economic growth of 5.5% in the year of 2021. This could mean that Singapore will have a strong recovery in 2021 despite the catastrophic economical fallout from COVID-19.
Fortunately, the manufacturing and financial sectors are performing relatively well throughout the pandemic, the reason is largely due to agile adjustment to work for employees, the use of technology and excellent business planning. Other sectors such as the construction sector would see positive growth if more foreign workers are to be tested for COVID-19 and be cleared for work. Given that foreign workers made up 40% of the Singapore workforce in 2019, it is safe to assume that a large influx of foreign workers and expats would directly boost Singapore’s economy in 2021.
Although some sectors have experienced hardships, the technology, communication, food delivery, and online retail sectors have been thriving and appeared to be the winners of this pandemic. This has also caused the rapid growth of the e-commerce industry which business owners could use to replace the losses of brick and mortar outlets.
All and all, while the recovery period for Singapore’s economy appears to be slow and gradual, it is undoubtedly recovering from the effects of Covid-19.
Although economists predict the country’s economy would recover, some sectors would not begin their recovery unless a universal vaccine for Covid is created, which could potentially take years. The all-important tourism and hospitality sector for Singapore is one of the victims as it has been decimated by the strict containment measures, the bans on international travel and the fear that the virus still persists within the community. This industry makes up roughly 4% of the country’s GDP yet in 2020, tourism fell to a whopping 99.9%. Yes, that is how destructive Covid-19 is towards the tourism sector, and that is not accounting for the jobs furloughed such as the air steward/stewardess, pilots, tour guides and the hotel staff.
In general, for sectors that require physical meetups or close contacts to their clients, such as the F&B and administrative sector, their very steep recovery depends on the handling of the Covid-19 crisis and an effective vaccine. If there is a resurgence of cases in Singapore, suffice to say stringent lockdowns and implementation of the Circuit Breaker (CB) would devastate the retail industry, forcing employers to let go of their staff.
The unemployment rate is expected to be at 2.4% next year which is a drop from this year’s 2.5%. Among Singapore citizens, the unemployment rate rose from 3.3% to 3.5% which resulted in social unrest among unemployed Singaporeans. In the second quarter of 2020, 6,700 workers were laid off and this led to some fears that those who were laid off may have a very difficult time to seek employment again in 2021 given how competitive and limited the job market is.
Despite the promising outlook of growth and recovery in 2021, experts warned that the GDP value would not return to pre-covid 2019 levels. Although most sectors are gradually recovering, if the resurgence of the novel coronavirus is present among the Singapore community, it is possible for us to see another downturn.
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