SINGAPORE, May 26, 2020 (BSS/AFP) – Singapore’s economy, a bellwether for
global trade, could shrink by as much as 7.0 percent this year, as the
coronavirus pandemic throttles demand, the government said Tuesday.
The trade ministry downgraded its forecast as official data showed gross
domestic product (GDP) fell by 0.7 percent year-on-year in the first quarter
to March, and by 4.7 percent compared with the previous quarter.
Like many other countries, Singapore has ordered the closure of most
businesses, advised people to stay at home, and banned large gatherings.
Officials say they may start relaxing the rules from early June but many
restrictions will remain.
Lockdowns to contain the virus in major markets such as the United States,
Europe and China have crippled demand for exports, and a halt in international
air travel has hammered Singapore’s key tourism sector.
“There remain significant uncertainties in the global economy,” the trade
ministry said in a statement.
“First, there is a risk that subsequent waves of infections in major
economies such as the US and Eurozone may further disrupt economic activity,”
it said.
“Second, a growing perception of diminished fiscal and monetary policy space
in many major economies could damage confidence in authorities’ ability to
respond to shocks.”
The economy is now expected to contract by up to 7.0 percent instead of 4.0
percent as projected in March “in view of the deterioration in the external
demand outlook” and the partial lockdown imposed domestically, the ministry
said.
“Notwithstanding the downgrade, there continues to be a significant degree
of uncertainty over the length and severity of the COVID-19 outbreak, as well
as the trajectory of the economic recovery,” it warned.
Singapore’s central bank in March eased monetary policy to support the
virus-hit economy.