The ongoing COVID-19 outbreak will lead Singapore into a recession more profound than the initial forecast, said the country’s central bank, cautioned the Monetary Authority of Singapore (MAS).
“At this juncture, there remains significant uncertainty over the severity of the downturn, as well as the eventual recovery,” said MAS in its latest report released on 27 April.
Singapore’s condition will depend on how the pandemic is developing and the efficacy of policies around the globe, making the outlook “full of uncertainties.”
The worst recession in Singapore took place during the 1998 Asian financial crisis, which caused the country’s economy to contract by 2.2 per cent.
Slightly over a decade later, Singapore’s economic growth plunged to 0.1 per cent in the 2009 global crisis.
Circuit breaker measures have sacrificed the growth
Singapore’s circuit breaker measures, introduced in early April, have been extended until 1 June, following the surge in the numbers of new cases, mostly from the crowded dorms housing migrant workers.
Under the circuit breaker, public places, schools, and offices are required to close.
Essential business services such as banking, media, information and technology, healthcare, and groceries are allowed to operate.
DBS senior economist Irvin Seah told The Straits Times on 27 April that the extension, “though necessary to contain the outbreak, will be a nail in the coffin for many locally-oriented industries”.
Such industries, according to Seah, include construction, retail, F&B, and business services.
Maybank Kim Eng Research Pte estimated that the circuit breaker would cost Singapore’s economy up to S$10 billion.
The country has introduced three stimulus packages aimed at mitigating the economic impact of the COVID-19, with a total worth S$41.7 billion, or 12 per cent of Singapore’s GDP.
The third stimulus focuses on providing assistance to businesses and subsidies to workers and the unemployed.
Other ASEAN nations are also suffering from the outbreak
Bloomberg noted that the economies of five Asian countries will contract in 12 months, with three out of them in Southeast Asia — namely Thailand, Singapore, and Indonesia.
Thailand’s chance for economic contraction is the second-largest below Japan, while Indonesia’s chance for shrinkage is the fifth.
Researcher at the Indonesian Policy Studies (CIPS) Pingkan Audrine Kosijungan told Wartaekonomi that given several global developments, it is unlikely that Indonesia’s growth would reach 5.3 per cent this year.
Indonesia has launched a Rp. 405 trillion stimulus package — 2.5 per cent of the country’s GDP — while Thailand’s incentive is 9 per cent of its GDP.
Thailand’s tourism sector, which contributes 20 per cent to the country’s economy, is hit hardest by the virus outbreak. Its central bank initially predicted that the economy would contract 5.3 per cent.
However, the Thai government is optimistic that the stimulus — supplemented by loans — can help prevent its economy from shrinking deeper.