(Bloomberg) -- Singapore’s economy will probably expand 4% to 6% next year as it rebounds from the coronavirus slump and global growth recovers.
The city-state also narrowed its forecast for this year’s contraction to 6%-6.5%, the Ministry of Trade and Industry said in a statement Monday. The economy shrank less than previously estimated in the three months through September, showing that brighter exports could help smooth a path to recovery after the worst quarterly plunge on record.
“On balance, given the improved growth outlook for key external economies, as well as a further easing of global travel restrictions and domestic public health measures that is expected in the year ahead, the Singapore economy is projected to return to growth in 2021,” MTI said.
Gross domestic product declined 5.8% in the third quarter from a year earlier, according to final estimates released by MTI. That was better than the previous estimate of a 7% contraction, and compares with a median forecast of -5.5% in a Bloomberg survey of economists.
The data follow the second quarter’s 13.3% plunge from the same period in 2019, which marked a record in data going back to 1990. On a quarterly basis, the economy grew a non-annualized 9.2% from the previous three months.
Healthier exports and industrial production have led economists, including at Maybank Kim Eng Research Pte Ltd., to upgrade their growth projections for Singapore. The bank had forecast the city-state would post a 5.1% contraction in the final third-quarter estimate, helped especially by pharmaceuticals manufacturing and improvement in real estate, retail trade, and transportation and storage, according to a report last week.
An easing in the virus count in Singapore has given room to policy makers looking to ease restrictions that have hindered business re-openings. The daily number of new cases, including incoming travelers ordered to quarantine, has hovered in single digits for most of the past few weeks.
Singapore officials have said there’s still scope to provide more fiscal stimulus after pledging about S$100 billion ($74 billion) in aid so far this year. Prime Minister Lee Hsien Loong said he sees the government running a budget deficit at least through early next year, and perhaps “a while” longer, in order to support ailing consumers and businesses.
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