Logo of Phnom Penh Post newspaper Phnom Penh Post - Singapore to expect hit in financial forecast

Singapore to expect hit in financial forecast

Content image - Phnom Penh Post
Gross domestic product (GDP) for Singapore in 2020 is now estimated at between minus 0.5 per cent and 1.5 per cent. THE STRAITS TIMES (SINGAPORE)/ANN

Singapore to expect hit in financial forecast

The economic fallout from the coronavirus outbreak has prompted the Singapore government to lower its growth forecast for the year – and raised the spectre of a possible recession.

Gross domestic product (GDP) is now estimated at between minus 0.5 per cent and 1.5 per cent – a stark revision from November, when the Ministry of Trade and Industry (MTI) tipped expansion of 0.5 per cent to 2.5 per cent.

Gabriel Lim, MTI’s Permanent Secretary, noted yesterday that the last time Singapore suffered a full-year recession was in 2001, when GDP contracted by about 1 per cent.

But he added that MTI’s view at this point is for GDP growth to come in at about 0.5 per cent for this year, which would mean the country dodges a full-year recession.

“As the Covid-19 situation is still evolving, there is a significant degree of uncertainty over the length and severity of the outbreak, and hence its overall impact,” Lim told a briefing.

He also noted that the economy shrank by 0.3 per cent in the second quarter of 2003, amid the severe acute respiratory syndrome (Sars) outbreak. But growth bounced back to 5.3 per cent in the third quarter, and 2003 ended up with growth of 4.5 per cent, added Lim.

Edward Robinson, deputy managing director of the Monetary Authority of Singapore (MAS), said the central bank was ready to recalibrate its policy if the outlook changes significantly due to the outbreak.

The great unknown this year is China. Growth there is expected to come in lower than projected due to a pullback in household consumption because of the lockdowns and travel restrictions to contain the virus, MTI said.

“These developments will, in turn, have a knock-on impact on regional economies, including the Asean economies,” it added.

Singapore’s outward-orientated sectors such as manufacturing and wholesale trade will be affected by weaker growth in several key markets, including China.

Potentially weaker demand in countries importing goods from Singapore also led Enterprise Singapore to downgrade its 2020 non-oil domestic exports growth forecast from zero to 2 per cent, to minus 0.5 per cent to 1.5 per cent.

MTI said the outbreak has led to a sharp fall in tourist arrivals, particularly those from China, while domestic consumption may take a hit as Singaporeans cut back on shopping and dining out.

However, there are pockets of relative strength, such as the construction, and the information and communications sectors.

DBS, OCBC and UOB analysts do not expect a full-year recession, given what they believe will be a strong response by the government to offset the impact of the outbreak.

Specific measures will be aimed at supporting the tourism, transport, retail and food and beverage industries, while rebates for property, road and diesel taxes and foreign worker levies, bridging loans and training support are also likely.

UOB economist Barnabas Gan said a potential technical recession is possible in the first half of this year, but growth will rebound by the end of the year.

THE STRAITS TIMES (SINGAPORE)/ASIA NEWS NETWORK

MOST VIEWED

  • ‘Kingdom one of safest to visit in Covid-19 era’

    The Ministry of Tourism on January 12 proclaimed Cambodia as one of the safest countries to visit in light of the Kingdom having been ranked number one in the world by the Senegalese Economic Prospective Bureau for its success in handling the Covid-19 pandemic. In rankings

  • Ministry mulls ASEAN+3 travel bubble

    The Ministry of Tourism plans to launch a travel bubble allowing transit between Cambodia and 12 other regional countries in a bid to resuscitate the tourism sector amid crushing impact of the ongoing spread of Covid-19, Ministry of Tourism spokesman Top Sopheak told The Post on

  • Kingdom accepts Chinese vaccine, PM first to get jab

    Prime Minister Hun Sen said China would offer Cambodia an immediate donation of one million doses of the Covid-19 vaccine produced by the Sinopharm company. In an audio message addressing the public on the night of January 15, he said Cambodia has accepted the offer and

  • Reeling in Cambodia’s real estate sector

    A new norm sets the scene but risks continue to play out in the background A cold wind sweeps through the streets of Boeung Trabek on an early January morning as buyers and traders engage in commerce under bright blue skies. From a distance, the

  • PM asks India for vaccine help

    Prime Minister Hun Sen is seeking assistance from India for the provision of Covid-19 vaccines as the country has produced its own vaccine which is scheduled to be rolled out to more than 300 million Indians this year. The request was made during his meeting with

  • Capital set to beef up security

    Phnom Penh municipal governor Khuong Sreng held the first meeting of the year with heads of armed forces in the capital to review and repair the deficiencies related to gun control, drug crimes, social order disruptions due to alcohol consumption and traffic law enforcement. Municipal