Advanced figures in April from the Ministry of Trade and Industry (MTI) showed Singapore registered a surprise growth in its GDP for the first quarter of 2021 of 0.2% from one year ago. This was the first expansion since the fourth quarter of 2019 and the onset of Covid-19.
Manufacturing registered a 7.5% growth year on year supported by Biomedical, Electronics, Chemical and Precision Engineering clusters and there was growth in the Information and Communications, Finance and Insurance sectors. Not all sectors experienced growth with the Construction sector continuing to shrink but at a slower rate and the Transport sector also showing decline. Other sectors registering declines included Accommodation and Food Services, Real Estate, Admin and Support Services and other service industries.
Encouragingly, the outlook for the second quarter is for a very strong rebound with growth predicted to potentially be in double digits.
So just as things had an air of normality about them (albeit a new normality) with positive economic numbers and Singaporeans eagerly awaiting the start of the Hong Kong/Singapore travel bubble, news announced on Friday 14 May of a further tightening of restrictions around social gatherings, dining at F&B establishments and a return to working from home as the default setting as a result of further increases of numbers of Covid-19 cases in the community, has reminded us here how fortunate we have been over the last year.
New restrictions will last from May 16 through June 13 under what has been called “Phase 2 (Heightened Alert)” and is not as severe as the previous “Circuit Breaker” introduced last year in April.
Everyone has been hoping for a rapid improvement in community cases of infection and there is a level of confidence that community rates will drop, but comments suggesting these current new measures may not be enough to defend against the more contagious new variants will be a cause for concern for businesses and the community at large.
We will need to consider what effects this may have on the economy and hiring should such measures as outlined in “Heightened Alert” be in place for longer or we enter into another Circuit Breaker. Would the Circuit Breaker take the same form as last year and will the government provide some level of enhanced support to other industry sectors (as it has for F&B establishments) via the Job Support Scheme (JSS) or another scheme?
On the positive side the government has taken a proactive approach while numbers are still comparatively low and globally we are not in the same economic situation as last year when the crisis first hit. While hopefully this will be a short term tightening, this is a reminder that we cannot take it for granted that all will be smooth sailing.