Singapore suffered a deeper recession in the second quarter than earlier estimated, prompting the Government to trim its growth outlook for the year and warn of a slower recovery.
The full-year economic outlook was slightly lowered, with the Ministry of Trade and Industry (MTI) now predicting gross domestic product (GDP) will shrink between 5 per cent and 7 per cent in 2020, compared to the previous forecast range of -4 to -7 per cent.
In the second quarter, the economy contracted by 13.2 per cent year on year, sharper than the 12.6 per cent plunge earlier estimated and the worst on record, MTI said on Tuesday (Aug 11).
The updated second-quarter decline will bring GDP contraction in the first half of 2020 to 6.7 per cent year on year, worse than the earlier estimate of a 6.45 per cent drop.
Mr Chan Chun Sing, the Minister for Trade and Industry said: “This is our worst quarterly performance on record. The forecast for 2020 essentially means the growth generated over the past two to three years will be negated.”
“I know that some are still hoping for a quick recovery, and a return to the familiarity of the old normal. The painful truth is this - we are not returning to a pre-Covid world, recovery will be some time yet and recovery is not likely to be smooth,” he added.
The second-quarter GDP plunge was due to the circuit breaker (CB) measures implemented from April 7 to June 1 to slow the spread of Covid-19 in Singapore, as well as weak external demand amid a global economic downturn caused by the pandemic, said MTI in a statement.
Annualised quarter-on-quarter and seasonally-adjusted, the economy shrank by 42.9 per cent in April to June, sharper than the 41.2 per cent fall earlier estimated.
"Notwithstanding the narrowing of the forecast range, there continues to be significant uncertainty over how the Covid-19 situation will evolve in the coming quarters, and correspondingly, the trajectory of the economic recovery in both the global and domestic economies," MTI said.
Ms Selena Ling, head of treasury research and strategy at OCBC Bank said: “The shading of the official growth forecast to the lower half of its initial forecast range is a realistic assessment of the current status quo.”
She said external demand conditions will remain a drag on growth, especially with major economies like the United States, Australia and Hong Kong combating localised Covid-19 outbreaks, delayed reopenings of international borders particularly for travel, a more pronounced downturn in the construction and marine and offshore engineering sectors, and generally weak domestic demand conditions due to the softening local labour market outlook.
MTI noted that since the last GDP forecast update in May, Singapore's external demand outlook has weakened slightly.
Source: The Straits Times
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<p>Time: November 2025<br /> By: WTO and International Trade Group, Legal Department – VCCI</p>
