Some industries may continue to grow even as economy heads for worst-ever recession: MAS

SINGAPORE – Even as Singapore slides into its worst-ever recession, some businesses ranging across the trade, services and retail sectors may continue to grow, the Monetary Authority of Singapore (MAS) said in its Macroeconomic Review on Tuesday (April 28).

The coronavirus pandemic has in fact boosted demand for medical products, making it Singapore’s only trade-related industry to register positive growth amid the collapse in global demand for other exports.

Pharmaceuticals shipments rose 48.6 per cent in March year on year, helping lift overall non-oil domestic exports for the month. The biomedical sector, that includes the drug industry, also kept industrial production in positive territory in the first quarter by surging 68 per cent.

Demand is on the rise for products needed to fight the outbreak, such as ventilators, masks and Covid-19 test kits, which are produced by several Singapore-based companies, MAS said.

For instance, Dyson plans to manufacture digital motors that will eventually be assembled into its ventilators. Other non-medical firms, such as Razer and ST Engineering, are setting up production lines to manufacture masks. Meanwhile, Singapore-based medical technology firm, Biolidics, has also developed rapid Covid-19 test kits.

MAS said when a vaccine for Covid-19 is eventually developed, Singapore could play a role in their mass production due to the presence of major global pharmaceutical firms.

“Overall, production in these industries should see positive growth in the coming quarters,” it said.

Modern services such as the information and communications technology (ICT) sector may also benefit from circuit breaker restrictions amid the sudden surge in number of people working from home.

Firms involved in online consumer-facing business should continue to gain from increased online transactions, MAS said.

While overall demand for business-to-business IT & information services is likely to remain weak until corporate activity firms up again, demand for remote-work services, bolstered by the two-month circuit breaker, is expected to provide some reprieve.

Many companies have had to activate work-from-home arrangements by changing their back-end work processes, in compliance with the Infectious Diseases Act that mandates all employers to implement telecommuting measures unless they are not feasible.

MAS said Enterprise Singapore’s recently-launched E-Commerce Booster Package, aimed at helping SME retailers with little e-commerce experience to start selling online, should benefit IT companies involved in providing related technical solutions.

The extended circuit break is also causing a shift in retail spending habits, increasing household demand for daily necessities due to more time spent at home, while eschewing discretionary spending, particularly on luxury and durable goods.

F&B outlets near residential areas, which remain open for takeaway or delivery, may also outperform higher-end restaurants that tend to be concentrated in business districts.

“The Food Delivery Booster Package rolled out by Enterprise Singapore will help more food establishments optimise their online presence and improve sales,” MAS said.

Although some recovery in discretionary retail spending is anticipated once the circuit breaker measures are relaxed, motor vehicle sales are still expected to remain soft, in tandem with a projected decline in Certificate of Entitlement quotas and lingering weakness in consumer sentiment, the central bank said.

Construction activity has virtually stalled and may remain so through the second quarter due to work stoppages during the circuit breaker period and amid a spike in infection cases among workers staying in dormitories.

Still, the construction sector should see some recovery in the second half of the year, underpinned by infrastructure projects such as the Deep Tunnel Sewerage System Phase 2, Thomson-East Coast MRT Line and Runway 3 for the Changi Airport Terminal 5, MAS said.

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