Experts expect Singapore's recovery from quarterly slump to be tepid
Singapore's recovery from its worst-ever quarterly slump is likely to be slow and choppy, with a coronavirus resurgence looming as a constant threat.
Travel and tourism will continue to bear the brunt of the pandemic, and full revival of construction activities may take longer than previously expected.
However, most economists expect demand for select export goods and robust demand for finance and insurance, and information and communications services to help the economy start its climb out of the depths of the recession.
Mr Edward Lee, Standard Chartered Bank's chief economist for Asean and South Asia, said: "Any pickup in second half growth is likely to be tepid."
The resurgence in Covid-19 infections in Australia, Hong Kong, Japan and elsewhere, resulting in re-imposition of mobility restrictions, will likely keep the pace of reopening gradual, he said.
Geopolitical tensions and the risk of corporate indebtedness may also depress investment sentiment, he added.
"On a more positive note, Singapore may continue to benefit from pharmaceutical and electronics demand. Digital payments and solutions activity may also continue to support the finance and infocomm sectors," said Mr Lee.
While most economists agreed that delayed reopenings of international borders, particularly for travel, will remain a drag on any recovery, some sectors - such as pharmaceuticals, electronics, gold and oil products - are likely to perform relatively better and support exports and GDP growth in the second half.
Mr Irvin Seah, senior economist at DBS Bank, said demand for biomedical products, electronic components and semiconductors have remained strong as companies globally turned to digital solutions to overcome the disruptions to business processes.
"The overall manufacturing sector is expected to remain an outperformer for the year," he said.
Enterprise Singapore yesterday upgraded its 2020 forecasts for non-oil domestic exports projecting a 3 per cent to 5 per cent year-on-year growth, compared with an earlier estimate for a 1 per cent to 4 per cent fall.
Those pockets of resilience may still not be enough to reverse the surge in unemployment, as job creation usually lags economic growth by several months.
Mr Joshua Yim, chief executive of recruitment firm Achieve Group, said that while his business has picked up slightly since a major plunge during the circuit breaker period, firms are generally still cautious about hiring.
But firms are seeking workers in info-communications technology roles and manufacturers, especially those in the semiconductors sub-sectors, Mr Yim said.