Singapore's economy rebounded in the third quarter from the doldrums of the circuit breaker, but the outlook through next year remains uncertain.

The Republic's gross domestic product (GDP) rose by 7.9 per cent in the July to September period, compared with the previous quarter on a seasonally adjusted basis, according to advance estimates released yesterday.

The rebound came on the heels of the "lost" April-June quarter, when the need to curb the coronavirus spread required strict restrictions on mobility and business activity, and caused the GDP to plunge 13.2 per cent quarter on quarter.

The Ministry of Trade and Industry (MTI) pointed out yesterday that the phased reopening of the economy that started in June contributed to its improved showing in the third quarter.

Highlighting the fact that Singapore is still in the midst of its worst recession, MTI data showed the economy shrank 7 per cent, compared with the same quarter last year.

This indicated that the pace of decline registered in the second quarter - when the economy nosedived 13.3 per cent compared with a year earlier - had been arrested.

Policymakers, however, remained cautious and MTI did not revise its full-year GDP forecast range, which envisages the economy shrinking between 5 per cent and 7 per cent.

Economists, including Mr Irvin Seah of DBS Bank, said the quarterly numbers suggested that the worst of the recession has passed, even though the central bank expects a hard slog next year.

"The worst is over for the economy, and the third quarter marks the start of the recovery from the Covid-19 pandemic," Mr Seah said.

Analysts believe manufacturing will remain a key driver of growth.

The sector grew 2 per cent year on year, reversing a 0.8 per cent drop in the second quarter, backed by robust global demand for semiconductors and semiconductor manufacturing equipment.

The construction sector was the biggest drag on growth.

It shrank 44.7 per cent year on year amid the slow resumption of construction activities due to the need to implement measures for a safe restart through most of the third quarter.

The services sector shrank by 8 per cent year on year.

While that was an improvement from the 13.6 per cent drop in the previous quarter, the outlook remains murky, with no end in sight to travel restrictions that have hit the aviation and hospitality sectors.

Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said that even the retail and food services segments may continue to struggle due to a weak labour market, which hits consumer confidence and spending.

Doubts on the economic outlook were also expressed by the Monetary Authority of Singapore (MAS) in a separate statement yesterday.

As widely expected, the central bank kept its policy stance of zero appreciation of the trade-weighted Singapore dollar unchanged.

But it also went ahead to warn that quarter-on-quarter growth may moderate going forward, with most sectors expected to recover to pre-pandemic levels only by the end of next year.

Mr Edward Lee, chief economist for Asean and South Asia at Standard Chartered Bank, said that from the MAS' perspective, there were several areas of concern as the economy heads into 2021.

They include soft labour market conditions and worries over a global resurgence of Covid-19 infections leading to the reimposition of lockdown measures that may weigh down consumer and business sentiment, he added.

Still, most analysts agreed that the Government's fiscal measures, including jobs support schemes, would continue to provide a floor to the economy and cushion it from the worst effects of the pandemic-driven recession.