Singapore’s economic forecast has been downgraded again after worse-than-expected performance in the second quarter.
The economy is now expected to contract by at least 5% this year rather than 4% after revised Q2 numbers found it fell a precipitous 42.9% since the first quarter rather than the 41.2% projected last month. Overall it was a contraction of 13.2% compared to the previous year instead of the preliminary 12.6% announced.
Singapore’s GDP plunges 41.2% from previous quarter
Announcing the revised forecast, the Ministry of Trade and Industry today did not change its worst-case scenario of a 7% annual contraction.
Second-quarter numbers fell across the board except in the finance and insurance sectors, which were boosted by 3.4% year on year, according to the ministry.
It also attributed the reeling economy to the pandemic’s ongoing effects, including the slow reopening of borders and lack of labor for sectors reliant on migrant workers, hundreds of thousands of whom have been locked down in worker housing to protect greater Singapore from the virus.
Minister Chan Chun Sing this morning called the latest GDP figures the “worst quarterly performance on record.” He also said that the lower forecast for 2020 will “essentially negate the growth generated over the last two to three years.”
Chan also told reporters this morning that his plans to revive the economy are based on three principles: reopening business in a safe and sustainable manner, helping sectors adjust to the “new normal,” and establishing the “right macro conditions.” The government is expected to provide regular updates on various sectors during the next few months.
Reaching for a silver lining, Chan noted that the nature of labor has changed as remote working becomes more popular. In that sense, global job opportunities could still come for Singaporeans, he said.
“The painful truth that we all need to accept is that we are not returning to a pre-COVID world. Recovery will take some time and is unlikely to be smooth given the recurring waves of infection and disruption we are seeing globally,” he said.
Referring to escalating tensions between China and the United States, Chan also cautioned Singapore of the potential effects of increasing tension between “major powers,” expressing hope that it would not lead to “open conflict” and affect the rest of the world.
GDP figures from last year. Table: Ministry of Trade & Industry Singapore
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