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Singapore’s economic activity carries the potential to contract between 4% and 7% this year as a consequence of the impact of the coronavirus crisis on the economy, noted Barnabas Gan, Economist at UOB Group.

Key Quotes

“Singapore’s GDP contracted 0.7% y/y (-4.7% q/q saar) in 1Q20, better than the advanced estimates of -2.2% (-10.6% q/q saar) previously released by the Ministry of Trade and Industry on 26 March 2020. This is the first year-on-year contraction since the Global Financial Crisis (2Q09: -1.2% y/y).”

“Other economic indicators also hint at Singapore’s relatively subdued economic performance for the year ahead. Total merchandise exports fell 1.3% in 1Q20, led by domestic exports (-6.2%). More starkly perhaps, is the plunge in services exports (-2.9%), suggesting that the tourism industry has been lacklustre. The labour market has also softened considerably, with unemployment rising to 2.4% in 1Q20.”

MTI downgraded Singapore’s full-year growth to a range of -4.0% to -7.0% in 2020, down from a previous forecast range of -1.0% and -4.0%. We keep our Singapore’s full-year growth GDP in 2020 to contract 4.0% with downside risks. The economic environment remains extremely uncertain at this juncture, especially given the phased easing of Singapore’s circuit breaker measures. Little clarity has been given on border re-opening, suggesting that tourist activities may remain subdued for a considerable period.”