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Economists expect Singapore’s economy to contract by 11.8 per cent in Q2, 5.8 per cent for the year

SINGAPORE — Economists expect Singapore’s economy to shrink by 11.8 per cent in the second quarter and 5.8 per cent this year, which would be the worst recession to hit Singapore if it were to come to pass.

The top concern of economists was an escalation in the Covid-19 pandemic that could push their projections even lower.

The top concern of economists was an escalation in the Covid-19 pandemic that could push their projections even lower.

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SINGAPORE — Economists expect Singapore’s economy to shrink by 11.8 per cent in the second quarter and 5.8 per cent this year, which would be the worst recession to hit Singapore if it were to come to pass. 

This latest forecast, published in a quarterly survey by the Monetary Authority of Singapore (MAS), reverses the economists’ earlier projections of a 0.6 per cent expansion and comes on the same day that the Ministry of Manpower (MOM) released first-quarter data that showed Singapore's job market was faring worse than initial estimates had predicted.

In the MAS survey released on Monday (June 15), economists said that they expect the second quarter to bear the brunt of the full-year decline, as they predict the three months ending in June to contract by 11.8 per cent compared with the same period a year ago.

The second quarter would capture the period during which Singapore imposed its circuit breaker that restricted movement and activities between April 7 and June 1.

Their projections are well within the official forecast range by the Ministry of Trade and Industry, which expects the economy to contract by between 4 and 7 per cent in 2020.

The survey findings were a result of 23 economists' responses to the survey sent out by MAS on May 26.  

Accommodation and food services are expected to be hit the hardest by the economic impact of the Covid-19 pandemic, with a 26 per cent contraction year-on-year, while wholesale and retail trade is also projected to shrink by 12.8 per cent. 

Only manufacturing (2.2 per cent growth) and the finance and insurance (3.1 per cent growth) sectors are expected to come through relatively unscathed. 

The unemployment rate is also forecast to go up to 3.6 per cent by the end of the year. The current unemployment rate is 2.4 per cent, based on MOM's report on how the labour market performed in the first quarter. 

The number of people employed has declined by 25,600 in the quarter. 

Headline inflation is expected to shrink by 0.5 per cent for the year, while core inflation — which strips away the costs of accommodation and private road transport — is predicted to decline by 0.5 per cent as well. 

The economists' top concern was an escalation in the Covid-19 pandemic that could push their projections even lower. 

They also pointed to the worsening trade tensions between the United States and China, as well as uncertainties arising from a deteriorating labour market as two other downside risks.

As for what could lead the Singapore economy to perform better than they expected, they listed the containment of the Covid-19 outbreak as the top factor. Others included a stronger-than-expected recovery in the global economy, as well as more fiscal stimulus by governments.

Related topics

economy GDP recession Covid-19 coronavirus

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