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

  • Phnom Penh placed in two-week lockdown

    The government has decided to place Phnom Penh in lockdown for two weeks, effective April 14 midnight through April 28, as Cambodia continues to grapple with the ongoing community outbreak of Covid-19, which has seen no sign of subsiding. According to a directive signed by Prime Minister

  • Cambodia on the verge of national tragedy, WHO warns

    The World Health Organisation (WHO) in Cambodia warned that the country had reached another critical point amid a sudden, huge surge in community transmission cases and deaths. “We stand on the brink of a national tragedy because of Covid-19. Despite our best efforts, we are

  • Vaccination open to foreigners in Cambodia

    The Ministry of Health on April 8 issued an announcement on Covid-19 vaccination for foreigners residing and working in Cambodia, directing the Ministry of Labour and Vocational Training and local authorities to register them. Health minister Mam Bun Heng, who is also head of the inter-ministerial

  • Culture ministry: Take Tuol Sleng photos down, or else

    The Ministry of Culture and Fine Arts has told Irish photographer Matt Loughrey to take down the photos of Khmer Rouge victims at Tuol Sleng Genocidal Museum which he allegedly colourised and altered to show them smiling. The ministry said Loughrey's work is unacceptable, affecting

  • Cambodia gears up for muted New Year festival

    The recent curfew and restrictions imposed in the capital and other Covid-19 hotspots were intended to break the chain of transmission, Ministry of Health spokeswoman Or Vandine said as municipal and provincial authorities issued new directives banning certain activities during the upcoming Khmer New Year

  • Covid-19 vaccination now obligatory

    Prime Minister Hun Sen on April 11 issued a sub-decree making Covid-19 vaccination compulsory for individuals unless they have a medical certificate proving they have pre-existing health conditions that prevent them from doing so. «This applies to all members of the armed forces and civil servants