Singapore’s economy contracted by 5.4% in 2020, the Trade and Industry Ministry said on Monday, slipping into the worst recession since Independence in 1965.

This marked the country’s first annual contraction since 2001. However, the figure is slightly better than the estimate of a 5.8% contraction issued last month.

In the fourth quarter of 2020, gross domestic product (GDP) in Singapore contracted by 2.4% on a year-on-year basis, an improvement from the 5.8% contraction in the third quarter of this year, a ministry statement said.

However, the ministry projected that the economy will grow by 4-6% this year.

The statement said the country’s COVID-19 situation remains under control and a vaccination program is also underway.

However, the pace of border reopening has slowed amidst the global surge in COVID-19 cases and the emergence of more contagious strains of the virus.

“Against this external and domestic backdrop, the Singapore economy is expected to see a gradual recovery over the course of the year, although the outlook remains uneven across sectors,” it said.

The ministry also highlighted that advanced economies, such as the US and Eurozone, are likely to reach population immunity by the second half of this year, which should in turn spur their economic recoveries.

On the other hand, it said, the growth prospects for regional economies such as Malaysia and Indonesia have weakened due to the recent resurgence in infections, which has necessitated the reimposition of lockdowns and restrictions.

“On balance, as the positive developments in the key external economies broadly offset the negative ones, Singapore’s external demand outlook remains largely similar compared to three months ago,” it added.

Singapore has so far reported nearly 60,000 COVID-19 cases, including 29 deaths and more than 59,600 recoveries.