Singapore’s economic system contracts by 2.2% in Q1 as COVID-19 outbreak hits development, companies sectors

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Singapore's economy contracts by 2.2% in Q1 as COVID-19 outbreak hits construction, services sectors


SINGAPORE: The Singapore economic system contracted by 2.2 per cent year-on-year within the first quarter, because the COVID-19 outbreak and world measures to stop its unfold threw a wrench within the development and companies industries, in keeping with flash estimates launched on Thursday (Mar 26).

This compares with the 1 per cent enlargement logged in the identical interval final yr, and reverses the 1 per cent development within the previous quarter.

On a seasonally adjusted annualised foundation, Singapore’s gross home product shrank by 10.6 per cent quarter-on-quarter, a pointy pullback from the 0.6 per cent development within the earlier quarter, in keeping with advance estimates launched by the Ministry of Commerce and Trade (MTI).

The grim knowledge prompted MTI to additional downgrade Singapore’s GDP development forecast for 2020 to between -Four per cent and -1 per cent.

It had already downgraded final month its full-year GDP forecast to -0.5 per cent to 1.5 per cent on account of the COVID-19 outbreak.

“Since then, the COVID-19 outbreak has escalated, and led to a big deterioration within the financial scenario each externally and domestically,” stated MTI.

“The broader forecast vary is to account for heightened uncertainties within the world economic system, given the unprecedented nature of the COVID-19 outbreak, together with the general public well being measures taken in lots of nations to comprise the outbreak,” it stated in a press launch.

A survey by MAS launched earlier in March confirmed that analysts had lowered their 2020 GDP development forecast to 0.6 per cent from the 1.5 per cent development indicated within the earlier ballot, with respondents extra pessimistic throughout all key macroeconomic indicators.

READ: SIA to implement COVID-19 cost-cutting measures, as much as 7 days no-pay depart a month for pilots

Deputy Prime Minister and Minister for Finance Heng Swee Keat is scheduled to ship a ministerial assertion on Thursday afternoon, and announce further assist measures for staff, companies and households.

Mr Heng beforehand introduced a S$Four billion Stabilisation and Assist Package deal to assist staff to stay employed and help firms with money movement.

Prime Minister Lee Hsien Loong has stated that Singapore’s economic system is taking a “large hit”, however has assured firms that the Authorities will hold them “afloat by means of the storm”.

COVID-19 IMPACT

Singapore has 631 COVID-19 instances as of Wednesday.

With the outbreak turning into extra widespread, authorities have progressively tightened border controls considerably to scale back the importation of COVID-19 instances, affecting the tourism and air transport sectors.

Authorities on Tuesday introduced extra measures to comprise the outbreak, together with limiting gatherings exterior of labor and faculty to a most of 10 individuals and shutting all leisure venues, together with golf equipment and cinemas.

This can additional weigh on home consumption, and have an adversarial impression on consumer-facing sectors equivalent to retail commerce and meals companies, famous MTI.

Singapore’s measures, in addition to these taken by governments all over the world to curb the unfold of the virus, together with lockdowns and journey restrictions, has led to provide chain disruptions and a pointy decline in vacationer arrivals in Singapore.

These measures, in flip, have had a ripple impact on the development and companies industries.

READ: Singapore tourism to take ‘important hit’ in 2020 resulting from coronavirus, as much as 30% fewer guests anticipated

The development sector took the biggest hit within the first quarter, the estimates by MTI confirmed, shrinking 4.Three per cent year-on-year. This can be a reversal from the 4.Three per cent development within the earlier quarter.

On a quarter-on-quarter seasonally adjusted annualised foundation, the sector contracted 22.9 per cent, in contrast with a 5.Three per cent enlargement within the previous quarter.

Lockdowns and journey restrictions carried out by different nations disrupted the availability chain and delayed the return of international staff, adversely affecting some development tasks, stated MTI.

Within the companies sector, air transport, lodging, meals companies and retail have been hit laborious on the again of a pointy decline in vacationer arrivals and a fall in home consumption.

On Monday, Singapore Airways stated it will slash 96 per cent of its capability and implement cost-cutting measures. With the absence of vacationers, resorts have rolled out staycation packages to draw native crowds.

Reflecting the impression, the companies producing industries shrank by 3.1 per cent from the identical interval final yr within the first quarter, reversing the 1.5 per cent development within the fourth quarter of 2019.

On a seasonally adjusted foundation, the companies producing industries declined 15.9 per cent, reversing from a 2.2 per cent development within the earlier quarter.

The Financial Authority of Singapore stated on Monday that it will launch its financial coverage assertion earlier on Mar 30, as Singapore’s core inflation fell 0.1 per cent in February, slipping into deflation for the primary time in additional than a decade.

ECONOMIC OUTLOOK

MTI stated that with COVID-19 spreading “quickly” past China to many different nations, together with the US, UK, France and Germany, many governments have carried out stringent measures to curb the unfold, together with closing their borders.

These nations are prone to see a pointy slowdown of their economies, stated the ministry.

“As the worldwide COVID-19 scenario continues to be evolving quickly, there stays a big diploma of uncertainty over the severity and length of the worldwide outbreak, and the trajectory of the worldwide financial restoration as soon as the outbreak has been contained,” stated MTI.

“The stability of dangers, nevertheless, is tilted to the draw back. Draw back dangers embrace a extra protracted-than-expected world outbreak; extra extreme and extended disruptions to world provide chains; and the opportunity of monetary shocks triggered by the financial impression of COVID-19,” it added.

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