George Russell in Hong Kong

Singapore’s economy continued to contract in the fourth quarter, according to data released on Monday, but at a slower pace than the previous quarter, as manufacturing, wholesale trade and finance grew as the effects of the coronavirus pandemic on the city-state faded.

The south-east Asian country’s gross domestic product declined by 2.4 per cent in the fourth quarter from a year earlier, according to revised data released by the Ministry of Trade and Industry.

The contraction was an improvement from the 5.8 per cent shrinkage in the preceding quarter, the ministry said.

On a quarter-on-quarter seasonally adjusted basis, the economy expanded by 3.8 per cent, following the 9 per cent growth recorded in the previous quarter, official data showed.

The ministry said it would maintain its GDP growth forecast for 2021 at 4-6 per cent.

“We raise our 2021 GDP growth forecast to 5.5 per cent,” said Brian Tan, Barclays analyst in Singapore.

Hawker’s apprentice Lim Wei Keat displays chickens at a food stall in Singapore

Manufacturing grew by 10.3 per cent year-on-year, extending the 11 per cent expansion in the third quarter.

“Growth was supported by output expansions in the electronics, biomedical manufacturing, precision engineering and chemicals clusters, which more than offset output declines in the transport engineering and general manufacturing clusters,” the ministry said.

The construction sector contracted by 27.4 per cent year-on-year due to declines in both public sector and private sector construction works, an improvement from the 52.5 per cent contraction in the third quarter.

The wholesale trade sector grew by 1.8 per cent year-on-year, a turnround from the 5 per cent contraction in the third quarter, the ministry added.

“The economy is on a recovery path after the strong rebound in Q3 and the trough registered in Q2,” said Irvin Seah, economist at DBS. “However, the pace of growth has slowed, as this V-shaped recovery turns into a square root shaped trajectory.”

Seah said Singapore had entered a normalisation process. “As economic activities gradually resume to norm, growth momentum will naturally revert to a more sustainable pace.”