Singapore’s economic outlook for 2020 was lowered further due to the deterioration in foreign demand forecast and the expected economic impact of the coronavirus containment measures.
The Ministry of Trade and Industry on Tuesday forecast the city-state economy to shrink “-7.0 to -4.0 percent” this year instead of “-4.0 to -1.0 percent projected in March.
The ministry said there continues to be a significant degree of uncertainty over the length and severity of the coronavirus, or Covid-19, outbreak, as well as the trajectory of the economic recovery, in both the global and Singapore economies.
Gross domestic product shrank 0.7 percent on a yearly basis in the first quarter, reversing a 1 percent rise in the fourth quarter 2019. The first quarter figure was revised from -2.2 percent.
On a quarter-on-quarter seasonally-adjusted annualized basis, the economy contracted 4.7 percent, a pullback from the 0.6 percent expansion in the fourth quarter of last year.
The manufacturing sector expanded by 6.6 per cent year-on-year on account of output expansions in the biomedical manufacturing, precision engineering and transport engineering clusters.
Meanwhile, the construction sector contracted 4.0 percent. Likewise, the wholesale and retail trade sector fell 5.8 percent and the transportation and storage sector declined 8.1 percent.
The accommodation and food services sector logged a sharp fall of 23.8 percent. At the same time, the information and communications sector grew 3.5 percent and the finance and insurance sector expanded 8.0 percent.
The business services sector shrank 3.3 percent in the first quarter.
A very strong performance from the biomedical manufacturing sector meant that Singapore’s economy contracted much less in the first quarter than previously thought, Alex Holmes, an economist at Capital Economics, said.
But with a stringent lockdown in place at home and demand cratering abroad, the sector is unlikely to stop a huge contraction in the economy in the second quarter, the economist added.
Elsewhere, the Enterprise Singapore lowered exports forecast for 2020. Non-oil domestic exports are forecast to fall “-4 percent to -1.0 percent” amid an escalation of the covid-19 outbreak worldwide since February.
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