Singapore’s economy suffered its biggest contraction since the 2008 to 2009 financial crisis during the first quarter as the coronavirus pandemic escalated, data showed yesterday, an ominous sign of the devastation being inflicted on the global economy.
The export-reliant city-state — one of the world’s most open economies and which is viewed as a barometer for the health of global trade — is now heading for a deep recession this year after shrinking 2.2 percent on-year.
The 2.2 percent contraction was the worst quarterly, on-year figure since 2009, the last time the city-state was plunged into recession.
“COVID-19 is like an economic tsunami hitting Singapore’s shores,” OCBC Bank (華僑銀行) research and strategy head Selena Ling (林秀心) said.
Compared with the previous quarter, GDP fell 10.6 percent, as all sectors of the economy were battered, according to advance estimates released by the Ministry of Trade and Industry.
The city-state is typically among the first countries to be hit during global crises because of its small and open economy, with ripples then spreading to other export-reliant Asian nations.
Singapore’s latest growth data “is like the canary in the mineshaft, and warns of further economic pain to come for other Asian economies,” Ling said.
The ministry further lowered its GDP forecast for this year, and said it expects the economy to shrink between 1 and 4 percent.
“As the global COVID-19 situation is still evolving rapidly, there remains a significant degree of uncertainty over the severity and duration of the global outbreak, and the trajectory of the global economic recovery once the outbreak has been contained,” the ministry said in a statement. “The balance of risks, however, is tilted to the downside.”
Even before the virus outbreak, Singapore’s economy was already being hammered by the US-China trade dispute.
Singapore normally gives advance estimates before the quarter ends, but the figures do not cover the full period, meaning the revised reading — which is to be released later — might be even worse.
Like many other places, Singapore has taken steps to contain the pandemic, including banning all foreign arrivals and closing bars and other entertainment venues.
However, the nation has reported a relatively low number of cases — 631 infections, with two deaths — and has held off imposing a total lockdown so far.
The government has won praise for its response to the outbreak, although the nation is now seeing a surge in imported cases as Singaporeans and residents return from other hard-hit countries.
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