Singapore’s embattled economy could shrink by as much as 7 percent this year, which would be the worst reading since independence in 1965, with the government saying yesterday that the COVID-19 pandemic had throttled the key export sector.
The Singaporean Ministry of Trade and Industry’s forecast — which was a downgrade from the 4 percent contraction predicted in March — came as official data showed that the economy shrank 0.7 percent year-on-year in the first three months of the year, while it contracted 4.7 percent from the previous quarter.
The ministry said the new estimate was made “in view of the deterioration in the external demand outlook” and the partial lockdown imposed domestically.
Shutdowns in major markets, such as the US, Europe and China, have crippled demand for exports, and a halt in international air travel has hammered Singapore’s key tourism sector.
Singapore has ordered the closure of most businesses, advised people to stay at home and banned large gatherings.
While officials have said they might start relaxing the rules from early next month, many restrictions would remain in place.
CIMB Private Banking economist Song Seng Wun (宋城煥) said he expects the second quarter to bear the full brunt of the virus’ fallout, with GDP expected to contract 15 to 20 percent.
“Singapore is a small and open economy, whose trade is three times the size of GDP. The sharp contractions are a reflection of its external vulnerability,” he told reporters.
The ministry also said “significant uncertainties” remain, despite the opening up of some economies as they slowly emerge from virus lockdowns.
“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 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 added.
The warning came hours before Singaporean Minister of Finance Heng Swee Keat (王瑞傑) delivered a fourth fiscal package of S$33 billion (US$23 billion) to counter the economic fallout of the coronavirus, providing specific support to saving jobs.
The latest measures would help businesses and workers affected by border closures and movement restrictions, Heng said in a parliament session.
The new package takes Singapore’s total support to almost S$100 billion, or about 20 percent of GDP, Heng said.
Singaporean President Halimah Yacob has already given her in-principle support for the government to tap past reserves to help finance the latest stimulus package. That is an unprecedented third time this year that reserves would be used.
Singapore was among the first governments in the region to unveil stimulus measures in February to counter losses from the pandemic, with the bulk coming in March via a S$48 billion package that included wage subsidies and cash handouts.
Officials expanded support since then as economic losses mounted amid global restrictions on trade and travel.
Singapore’s central bank in March eased monetary policy to support the virus-hit economy.
Additional reporting by Bloomberg
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to