SINGAPORE, Feb 17 — Singapore's Ministry of Trade and Industry (MTI) has slashed Singapore's economic growth forecast for 2020 amid the Covid-19 outbreak, with a possible full-year recession on the cards.
In a press release today, the MTI downgraded its growth forecast to between -0.5 per cent and 1.5 per cent, with overall growth to come in at around 0.5 per cent
Its previous forecast was between 0.5 and 2.5 per cent.
On Friday, Prime Minister Lee Hsien Loong said that the economic impact of the Covid-19 outbreak was already bigger than in 2003, when Singapore was hit with an outbreak of the severe acute respiratory syndrome (Sars).
Lee also said that a recession was possible.
MTI warned that if the Covid-19 outbreak is more widespread, severe and protracted than expected, there could be a sharper decline in global consumption, as well as more prolonged disruptions to global supply chains and production.
Trade tensions between the United States and China, as well as geopolitical tensions in the Middle East also add to the global uncertainties.
“Against this backdrop, the outlook for the Singapore economy has weakened since the last review in November,” said MTI.
The Covid-19 outbreak is expected to affect outward-oriented sectors such as manufacturing and wholesale trade due to the weaker growth outlook in several of Singapore’s key final demand markets, including China.
Firms in these sectors could also be affected by supply chain disruptions arising from prolonged factory closures and labour shortages in China as a result of the measures implemented by the Chinese government to contain the outbreak.
The outbreak has also led to a sharp fall in tourist arrivals, particularly from China, to Singapore. This has badly affected the tourism sector, said MTI.
Domestic consumption in Singapore is likely to decline as locals cut back on shopping and dining-out activities. This will adversely affect firms in segments such as retail and food services.
Today, MTI also said that the Covid-19 outbreak is likely to dampen growth prospects of China and other affected countries in 2020.
In China, growth in gross domestic product for 2020 is expected to come in lower than earlier projected due to a pullback in household consumption as a result of the lockdowns and travel restrictions implemented in several major Chinese cities to contain the spread of the virus, said MTI.
Industrial production has also been disrupted because of work stoppages and delays arising from these containment measures.
"These developments in China will, in turn, have a knock-on impact on regional economies, including the Association of South-east Asian Nation (Asean) economies, through lower outbound tourism and other import demand from China, as well as disruptions to supply chains," read the statement.
Other regional economies directly affected by the outbreak, such as Japan, Thailand and Malaysia, may also experience a drop in domestic consumer sentiments, and hence private consumption growth, noted MTI. — TODAY