8 Things That Business Owners Should Know About Singapore’s Economic Recovery in 2Q 2021

Singapore GDP grew 14.7% in the second quarter 2021. While this looks stellar, it comes off a depressed base in 2020 due to COVID-19 – including the Circuit Breaker period in Singapore and was at the height of global pandemic uncertainties. 

During that period in 2020, Singapore’s GDP had fallen 13.3%, which means we are still not yet fully recovered from the COVID-19 slowdown. Compared to our pre-pandemic level in 2Q 2019, GDP remains around 0.6% lower.

Here are 8 quick things all business owners should know about Singapore’s 2Q 2021 GDP growth. For those who want a deeper take on the statistics, you can read the Economic Survey of Singapore Second Quarter 2021 report.

#1 Government Guiding For Even Better Than Expected GDP Growth Despite Setbacks In 3Q 2021

On the back of a good 2Q 2021 showing, the government is guiding for GDP growth to be in the range of 6.0% to 7.0% in 2021.

We think this is a strong sign that the government is very confident of achieving the improved guidance rate. This is because it has gone ahead to revise GDP growth upwards despite the pockets of weakness that still remained as of 2Q 2021, and more importantly, despite knowing that Singapore had to tighten COVID-19 restrictions again in 3Q 2021.

#2 Most Sectors Experienced Positive GDP Growth

While the overall GDP growth came in at 14.7%, not all sectors would have expanded uniformly. There are still pockets of the economy suffering due to continued border restrictions. Nevertheless, most sectors expanded in 2Q 2021. Construction rebound 106%, mainly because works came to a standstill during the Circuit Breaker period in 2020. Other sectors that were most impacted by the Circuit Breaker also registered the highest growth rates, including Retail Trade, F&B Services, and Real Estate.

GDP and Sectoral Growth Rates in 2Q 2021

Read Also: Singapore SMEs Saw Sharp Business Turnaround In 2Q2021

#3 GDP Growth Was Powered by Manufacturing Sector

The sectors that contributed the most to 14.7% GDP growth were Manufacturing (3.7 percentage points), Other Services (1.6 percentage points), Construction (1.5 percentage points and Finance and Insurance (1.5 percentage points). 

Output expansions were recorded in all manufacturing clusters, with the transport engineering (30%) and precision engineering (24%) clusters recording the largest gains.

In fact, all sectors (including Accommodation) contributed positively to the strong GDP growth in 2Q 2021, except for Administrative & Support sector – perhaps impacted by our digitalisation drive. 

Percentage-Point Contribution To Growth Rates in 2Q 2021

#4 ICT is the Sector with the Highest Employment Growth

The seasonally-adjusted overall resident and citizen unemployment rates declined as at June 2021 compared to March 2021. This also marked the third consecutive quarter that employment levels improved in Singapore. However, the number of retrenchments rose slightly – with the bulk of it coming from the manufacturing and construction sectors.

Firms in the Information & Communication Technology (ICT) sector saw the biggest employment growth. Professional Services and Finance & Insurance were the only other sectors that grew headcount. 

The rest of the sectors in Singapore saw a shrinking workforce, with Manufacturing, Food & Beverage Services and Construction reducing their overall headcount most aggressively.

Changes in Employment by Industry

Read Also: Winners And Losers Of Vaccination-Differentiated COVID-19 Measures From 10 August 2021

#5 Resident Unemployment Rate At 3.7%

Unemployment rate for citizens and residents have been on a downward trend since peaking in September 2020. While this is a good sign, the total employment rate took a turn for the worse, dipping 19,300 by the end of 2Q 2021 (in June 2021).

Change in Total Employment, Q-o-Q

In tandem with Singapore re-opening and improving GDP, total employment was improving until 2Q 2021. While economic statistics are generally positive, this weakness remains an area Singapore businesses need to watch more closely.

#6 Consumer Price Index (CPI) Increased by 2.3%

Categories Contributing to the CPI % Change (Y-o-Y)

Transport costs went up the most, mainly due to an increase in the prices of cars and petrol. Household Durables & Services, Education and Food prices also rose more than 1%. The costs of food serving services like hawker food and restaurant meals, as well as non-cooked food items such as vegetables and fruits, contributed to the rise in Food costs. 

Meanwhile, Clothing & Footwear prices continued to slide because of cheaper ready-made garments and footwear to choose from – likely exacerbated by online buying from overseas.

#7 Total Services Exports Grew by 10.3%

The 10.3% growth in services exports was largely attributable to a rise in the exports of other business services, transport services and financial services.

Services Imports also increased 8.2% mainly due to an increase in the imports of other business services, transport services, and telecommunications, computer & information services. 

Positively, this points to growing trade with our overseas partners.

#8 Overall Unit Labour Cost Increased by 18.2%

While overall productivity grew 1.7% in 2Q 2021, the increase in total labour cost per worker increased at a faster pace. This itself should not be worrisome as it was largely driven by the tapering of wage subsidies, such as the Jobs Support Scheme, provided by the Government.

This resulted in the overall Unit Labour Cost to increase by 18.2%. 

Read Also: Here’s What You Need To Know About The Jobs Support Scheme (JSS)

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