Singapore’s GDP is slated to contract between 4.5% and 5.5% year-on-year in the ongoing 3Q2020 which ends on September 30, CGS-CIMB Securities estimates.

This is “weaker than our initial forecast of a 3.5% decline [and is] based on a diet of data that has already been released for July and August,” explain economists Michelle Chia and Lim Yee Ping in a September 28 note.

For instance, Singapore’s manufacturing activity staged a surprising 13.7% year-on-year rebound in August, from a 7.6% contraction seen the previous month. 

See: Singapore's factory output surprises with 13.7% increase in August

Chia and Lim say this came from heightened demand for semiconductors due to the recovery in global economic activity and stockpiling ahead of the ban imposed by the US on suppliers of key components to Huawei on September 15.

September 15 marks the date from which the Chinese tech company stopped making its flagship Kirin chipsets – key components in mobile phones - due to pressures from the US on Huawei’s suppliers. 

Another interesting cluster was land transport which saw a 9.3% year-on-year surge in production after a four-month streak of contractions. 

Chia and Lim attribute this to the resumption of infrastructure projects such as construction works of MRT lines.

The duo expect manufacturing “to make further inroads into recovery,” but caution an “unevenness in the factory outlook”.

Meanwhile, Chia and Lim point out bright spots in Singapore’s retail sales which rose by 27.4% month-on-month in July – the first full month since the start of the phase 2 measures which allowed for in-person dining at restaurants and the re-opening of most stores.

See: Singapore's retail sales remains in the red in first full month after circuit breaker

“Sharp sequential gains were recorded at department stores while pent-up demand for discretionary goods drove purchases of apparel, watches & jewellery, household equipment & furniture, recreational goods, and computer & telecommunication equipment,” say the economists.

And while the metric has improved from the average logged in 1Q2020, it is still 8-10% below the 2019 average.

“We expect further advances following the government’s decision to ease safe distancing rules and allow more activities to resume,” say Chia and Lim.

These activities include allowing employees to return to working at offices from September 28, and giving out $100 in SingapoRediscovers vouchers to Singaporeans aged 18 and above to buoy spending in local tourism.

Still these measures may not be enough to lift the retail sales metric into positive terrain. 

“We think a small deficit in retail sales is likely to persist in 2H20 due to the downturn in international tourist arrivals,” observe Lim and Chia.