The official gross domestic product (GDP) growth forecast by the Ministry of Trade and Industry (MTI) for Singapore for 2020 has been downgraded further to between -4 per cent and -1 per cent in Q1 of 2020.
Compared to the forecast by the MTI in February at -0.5 per cent to 1.5 per cent, this lower forecast represents a worse outlook for the economy.
Earlier this morning (26 March), MTI reported: “Since then, the COVID-19 outbreak has escalated and led to a significant deterioration in the economic situation both externally and domestically.”
The downgraded forecast reflects the steep decline in the domestic and external environment since February and the weaker-than-expected performance of the Singapore economy in Q1 of 2020.
Amid the unprecedented nature of the COVID-19 spread alongside the public health measures implemented in countries across the world, the wider forecast range serves to incorporate the heightened uncertainties in the world economy.
According to advanced estimates, the economy slowed down 2.2 per cent year-on-year in Q1 of this year, which led to the growth forecast being revised.
The economy contracted 10.6 per cent from a quarter-on-quarter seasonally adjusted annualised basis, recoiling steeply from 0.6 per cent growth in the last quarter.
In the previous quarter, there was a 2.3 per cent contraction, compared to the 0.5 per cent year-on-year contraction in the manufacturing sector. Although there was output expansion in the precision engineering and biomedical manufacturing clusters, this was substantially offset by the output contraction in the chemical and electronic clusters.
There was a 4.3 per cent year-on-year contraction in the construction sector, which was a reverse from the 4.3 per cent growth in the last quarter. The increased delays in the return of foreign workers, the fall in private-sector construction activities, and the supply chain disruptions brought about by the travel restrictions and country lockdowns have imposed pressure on the construction sector.
Also, there was a 3.1 per cent year-on-year contraction in the services-producing industries from the 1.5 per cent growth in the last quarter. Sectors like retail trade sectors, air transport, accommodation, and food services also suffered from the steep decline in domestic consumption and tourist arrivals due to the COVID-19 spread.
Supply chain disruptions and the drop in external demand also caused wholesale trade and other storage and transportation sectors to shrink.
According to MTI, small, positive growth was nonetheless recorded in the finance and insurance sectors, alongside the information and communications sectors.