Singapore staring in the face of worst recessionBusiness | 26 May 2020 11:24 am
Singapore is bracing for its worst-ever recession and authorities are cutting growth projections for 2020 yet again as the economy continues to feel severe strain from the coronavirus pandemic.
Singapore’s gross domestic product (GDP) is expected to shrink between 4 and 7 percent this year, down from the previous projected range of a contraction between 1 and 4 per cent, the Ministry of Trade and Industry (MTI) said today, Channel News Asia reports.
The last time Singapore posted a full-year contraction was during the dotcom bust in 2001 when growth fell by 1.1 per cent. Its worst recession thus far happened during the Asian Financial Crisis in 1998. The economy shrank by 2.2 per cent then.
Today’s cut in GDP growth forecasts deeper into negative territory marks the third revision by the country’s policymakers in slightly more than three months and follows a warning by the central bank last month of a worse-than-expected slump.
MTI said its latest downgrade is made in view of a deterioration in the external demand outlook for Singapore and the expected economic impact from the country’s “circuit breaker” measures.
“Notwithstanding the downgrade, there continues to be a significant degree of uncertainty over the length and severity of the coronavirus outbreak, as well as the trajectory of the economic recovery in both the global and Singapore economies,” it cautioned.
However, MTI noted that there are pockets of resilience in the Singapore economy.
Within the manufacturing sector, the biomedical manufacturing cluster is expected to continue expanding, supported by the production of pharmaceutical and biological products.
Among the services sectors, the information and communications sector is also projected to grow given firms’ resilient demand for IT and digital solutions.
MTI’s data also showed the economy contracting by 0.7 percent year on year in the first three months of the year, better than the Government’s initial estimate of 2.2 per cent but reversing from the 1 percent growth in the earlier quarter.-Photo: Straits Times