A running woman passed by a Merzion park on June 12, 2020 in Singapore.
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Singapore announced on Tuesday that its economy was contracting more than originally expected and narrowed its economic forecast for the full year 2020.
Singapore̵7;s economy contracted 42.9% in the second quarter of 2020 compared to the previous quarter, the Ministry of Trade and Industry said. The updated figure was worse than the official advance assessment released last month and confirmed that the Southeast Asian country had entered a technical recession,
The rating, calculated mainly from data in April and May, had shown that the economy had shrunk by 41.2% in the second quarter, compared to the previous three months.
On a year-on-year basis, the country’s gross domestic product shrank by 13.2% in the quarter ended June 30, according to the ministry. This is worse than the previous estimate of an annual contraction of 12.6% year-on-year and a 0.3% annual decline recorded in the first quarter.
Large parts of Singapore’s economy closed in early April as the country entered a partial stalemate – which the government called a “breaker” – to slow the spread of the coronavirus. Some of the restrictions have been eased since the beginning of June, allowing most of the economy to reopen.
“The decline in GDP was due to County Division (CB) measures implemented from 7 April to 1 June 2020 to slow the spread of COVID-19 in Singapore, as well as weak external demand in the midst of a “The global economic downturn caused by the COVID19 pandemic,” the ministry said in a statement.
Covid-19 is the official name of the coronavirus disease. In Singapore, there have been more than 55,000 confirmed infections and 27 virus-related deaths, according to data from the health ministry. Most of those infected have recovered, with 5,656 cases still “active” as of Monday, the health ministry said.
The partial blockade halted almost all construction activity in the second quarter, resulting in the sector falling 59.3% year-on-year in the second quarter, data from the Ministry of Trade and Industry showed. An explosion among migrant workers living in dormitories – many of whom worked in construction – added to the sector’s weakness, the ministry said.
Here is how other sectors performed in the April-June quarter:
- Production shrank by 0.7% year-on-year;
- Accommodation and food services fell 41.4% year-on-year;
- Transport and storage plunged 39.2% from last year;
- Wholesale and retail trade fell 8.2% year-on-year;
- Finance and insurance grew 3.4% over the same period – the only sector to record growth.
Revised 2020 forecast
The Ministry of Commerce and Industry revised its full-year forecast for Singapore to record an economic contraction of between 5% and 7% in 2020. Earlier, it had expected the country’s GDP to fall between 4% and 7%.
“The outlook for Singapore’s economy has weakened slightly since May,” the ministry said.
He cited three reasons for the deteriorating outlook:
- A humiliated lower economic environment, which will weigh sectors such as transportation and storage, as well as wholesale trade;
- The reopening of international borders is expected to be more gradual than previously expected, which will put pressure on the tourism and travel-dependent sectors;
- Sectors dependent on foreign workers living in dormitories have taken longer than expected to resume activity. Those workers account for more than 90% of Singapore’s cumulative confirmed cases.
“However, there are some areas of strength in the Singaporean economy,” the ministry added. He clarified that the demand for semiconductors has been stronger than expected, while the biomedical production group is also expected to continue to grow.
Still, the ministry said there is still much uncertainty in the near term.
“Despite the narrowing of the forecast range, there is still considerable uncertainty about how the COVID-19 situation will evolve in the coming quarters, and respectively, the trajectory of economic recovery in both global and domestic economies.”