Photo credit: MOF

Economic Performance in 2Q 2020

Singapore’s Ministry of Trade & Industry (MTI) had forecasted a negative GDP growth for the full year 2020. That means that the economy had contracted instead of expanding, between -7% to -5% year-on-year (yoy). In the 2Q 2020, the economy was recorded as contracted by as much as 13.2% yoy, worsening from 0.3% contraction in the 1Q 2020.

The severe contraction in the 2Q 2020 was attributed to the full implementation of lockdown (‘circuit breaker’) to contain the spread of Covid 19 in the community. Almost all the sectors were hit hard mainly by the covid 19 pandemic and a slower global economy.

The manufacturing sector overall shrank by 0.7% yoy with different segments fared differently. Biomedical, electronics and precision engineering saw increase output while the opposite is true for transport engineering, general manufacturing and chemical clusters.

The construction sector shrank by a whopping 59.3% yoy, due to site work stoppages while the wholesale & retail trade sector saw its output shrank by 8.2% yoy, due to lower demand for machineries, equipment, supplies and closure of shops.

The transportation and storage sector shrank by 39.2% yoy mainly due to the closure of changi airport as transit hub and international travel restrictions lowering air travel demand.

The accommodation and F&B sector shrank by 41.4% yoy due to collapse in travel and MICE industry while the Infocommunications & Technology sector saw only a minor 0.5% contraction yoy mainly due to healthy demand of IT solutions such as data centers.

On the other hand, the finance & insurance sector expanded by 3.4% yoy due to the acceleration in digital payment and insurance demand. The business services sector however suffered a 20.2% setback yoy mainly due to weak demand in real estates and professional services.

The ‘other services’ sector contracted by 17.8% yoy due to business space closures and lower demand due to lockdown

Economic Outlook for remainder of 2020

Singapore’s MTI forecasted a negative GDP growth of between 5% to 7% yoy based largely on ‘damages’ done during the 2Q 2020 circuit breaker and forecasts on the global economic performance. In the US, the GDP contracted in the 2Q 2020 and recovery is not expected till at least turn of the year while similary in the Eurozone, the GDP contracted and the economy is not expected to fully recover before end of the year.

Over in Asia, China’s economy expanded in the 2Q 2020, following contraction earlier in the 1Q 2020 primarily due to Fixed Asset Investments. Chinese exports are not expected to fully recover same as that of the main countries in the South East Asia. Malaysia, Indonesia and Thailand’s exports are not expected to rebound due to still weak global demand while economic growth at home will be somewhat sub-par due to covid 19 pandemic.

Against all these backdrop, Singapore’s MTI said that Singapore’s economic outlook will look weakened due to subdued external economic environment, delayed international travel and border resumption to normal, and a slower pickup in domestic construction and a weaker marine & offshore, and oil & gas industry which hold some spill-over effects to other sectors.

escveritasASEANBanking & FinanceGlobalcovid 19,economic,gdp,Singapore  Photo credit: MOF Economic Performance in 2Q 2020 Singapore's Ministry of Trade & Industry (MTI) had forecasted a negative GDP growth for the full year 2020. That means that the economy had contracted instead of expanding, between -7% to -5% year-on-year (yoy). In the 2Q 2020, the economy was recorded as...