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S'pore services exports to continue growth in 2022 amid fewer border restrictions, higher demand

Travel services exports recovered to just 27.1 per cent of pre-pandemic level by the first quarter of this year. ST PHOTO: FELINE LIM

SINGAPORE - The Republic's services exports are expected to continue expanding this year amid the easing of border restrictions and higher global demand in line with post-pandemic recovery.

Services exports took a longer time to recover to pre-Covid-19 levels, compared with recovery following the Sars pandemic of 2003 and the global financial crisis of 2008 to 2009.

Exports of services grew 7.1 per cent year on year in the first quarter, due to the increase in other business services exports, travel receipts, as well as receipts from the charges for the use of intellectual property, trade agency Enterprise Singapore noted in a release on Wednesday (May 25).

Services exports include the likes of financial services, maintenance and repair services, and travel.

Overall, services exports rebounded in 2021, recording a 6.7 per cent increase after shrinking 1.6 per cent in 2020 with the onset of the Covid-19 pandemic.

The recovery was primarily supported by exports of other business services, transport services, and charges for the use of intellectual property despite continued challenges for the exports of travel services.

The report noted that compared with past crises, the impact of the Covid-19 pandemic on Singapore's services exports was larger and more prolonged.

Services exports took seven quarters to return to pre-pandemic levels, compared with just two quarters after the onset of Sars and six quarters after the start of the global financial crisis.

The sector saw its sharpest decline in the immediate quarter after the start of the Covid-19 pandemic, falling 16.9 per cent in the second quarter of 2020 compared with the previous three-month period.

This was compared with a 5.2 per cent dip one quarter after the onset of the global financial crisis and a 11.9 per cent decline seen one quarter after Sars broke out.

The 1.6 per cent contraction in services exports seen in 2020 came after services exports recorded a 8.9 per cent per annum growth on average between 2010 and 2019, outpacing the growth of merchandise exports.

This decline was driven largely by the plunge in travel services exports, given border closures due to the pandemic.

Travel services exports - most badly hit by the pandemic - have remained weak despite recovery in other segments, recovering to just 27.1 per cent of pre-pandemic level by the first quarter of this year.

In contrast, other categories such as charges for the use of intellectual property and telecommunications, computer and information services expanded during the pandemic.

These export categories were relatively less affected by Covid-19 as many of the services could be delivered remotely to clients, rendering them more resilient to the impact of global border restrictions, the report noted.

Additionally, the pandemic catalysed the push for digital transformation among enterprises in the region, which helped to support Singapore's exports of telecommunications, computer and information services, while financial services exports benefited from the shift to online business platforms.

The report highlighted that over the longer term, there would be many new opportunities for the Republic's services exports, especially as economic growth and the rising middle class in China and Asean leads to an increase in demand for services.

At the same time, it is important for Singapore to continue to develop its capabilities as a business and logistics hub, so that it remains well positioned to serve the region's demand for services, it added.