SINGAPORE, Aug 11 — The government has downgraded Singapore’s growth forecast for 2020 as the country enters into its worst recession since independence.
From an initial projection that the economy will shrink between 4 and 7 per cent, the Ministry of Trade and Industry (MTI) said today that gross domestic product (GDP) will contract between 5 and 7 per cent.
The trade-reliant economy shrunk 13.2 per cent for the second quarter of this year, compared to the same period a year ago — faring worse than the earlier estimates of 12.6 per cent.
However, on a quarter-on-quarter basis, the economy contracted by 13.1 per cent, significantly better than the advanced estimates of 41.2 per cent, which were just based on data in April and May.
“The fall in GDP was due to the circuit breaker measures implemented from April 7 to June 1 2020 to slow the spread of Covid-19 in Singapore, as well as weak external demand amidst a global economic downturn caused by the Covid-19 pandemic,” said MTI in a media release.
Among the sectors hit the hardest were construction, transportation and storage, as well as the accommodation and food services sector.
The construction sector contracted 59.2 per cent in the second quarter compared to the same period last year as almost all construction activities stopped during the circuit breaker.
“Construction firms were also affected by manpower disruptions arising from additional measures to curb the spread of the virus, including movement restrictions at foreign worker dormitories,” said MTI.
As for the transportation and storage sector, the decimation of global air travel, a drop in sea cargo volume at the ports, and a sharp drop in the use of land public transport due to remote working caused the sector to shrink by 39.2 per cent over the same period.
The accommodation and food services sector contracted by 41.1 per cent in the second quarter compared to a year ago due to a plunge in international arrivals and restrictions in dining-in activities during the circuit breaker.
MTI said that Singapore’s external demand outlook has weakened slightly since May when it downgraded the growth forecast for 2020 to between -7 and -4 per cent.
“Many of Singapore’s key final demand markets saw worse-than-projected economic disruptions in the second quarter, and are also expected to experience a more gradual pace of recovery in the second half of 2020 due to the threat of localised outbreaks and the continued need for restriction measures to contain such outbreaks as they occur,” said MTI. — TODAY