Singapore enters recession as economy shrinks by 41.2% in Q2

Singapore’s economy contracted by 41.2 per cent in the second quarter from the previous three months, according to advance estimates by the Ministry of Trade and Industry (MTI) on Tuesday (14 July), in which the contraction was inflicted by the country’s circuit breaker measures against the coronavirus pandemic.

The gross domestic product (GDP) plummeted 12.6 per cent on a year-on-year basis, which is worse than the first quarter when Singapore’s economy registered a 0.7 per cent contraction.

MTI stated that the country’s circuit breaker measures – that were implemented from 7 April to 1 June to curb the spread of the COVID-19 – and weak external demand amid a global economic downturn had inflicted the decline in GDP.

The city-state expects a full-year contraction of 7 to 4 per cent, which would be its biggest downturn since independence in 1965.

The construction sector shrank by 54.7 per cent on a year-on-year basis, which showed a significant decline from the 1.1 per cent fall in the first quarter. While on a quarter-on-quarter basis, the construction sector contracted by 95.6 per cent in the second quarter.

“Construction output weakened on account of the circuit breaker measures which led to a stoppage of most construction activities during the period, as well as manpower disruptions arising from additional measures to curb the spread of COVID-19, including movement restrictions at foreign worker dormitories,” said the MTI.

The services-producing industries contracted by 13.6 per cent on a year-on-year basis in the second quarter, steeper than the 2.4 per cent decline in the previous quarter.

The manufacturing sector grew by 2.5 per cent in the April-to-June period, although the growth was slower than the 8.2 per cent pace recorded in the first quarter. On a quarter-on-quarter basis, the manufacturing sector shrank by 23.1 per cent.

MTI noted that the growth in the manufacturing sector was primarily aided by a surge in biomedical manufacturing, adding that the slow pace in growth was due to weak external demand and workplace disruptions amid the circuit breaker.