Singapore’s economy could shrink 7.6% on-year in the third quarter, central bank survey shows

A man wearing a face mask walks past a mural in Chinatown in Singapore on April 1, 2020.
Roslan Rahman | AFP | Getty Images

SINGAPORE — Singapore’s economy is expected to shrink by 7.6% in the third quarter compared to a year ago, with the coronavirus pandemic remaining the top economic threat, according to a central bank survey of economists and analysts.

That would be the Southeast Asian economy’s third consecutive quarter of year-over-year contraction. But it will still be an improvement from the second quarter’s 13.2% decline versus a year ago — which is the country’s worst quarterly contraction on record, data by the Singapore Department of Statistics showed.

The quarterly survey was sent out last month to 28 economists and analysts who closely monitor the country’s economy. The Monetary Authority of Singapore received replies from 26 of them.

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Here are survey respondents’ forecast for the different sectors in the third quarter:

  • Accommodation and food services would shrink by 30% in the July-to-September quarter compared to a year ago;
  • Construction, one of the sectors most reliant on migrant workers, is projected to contract by 25% year over year;
  • Wholesale and retail trade, as well as manufacturing, are forecast to contract by 6% and 0.6% on-year, respectively;
  • Finance and insurance appears to be a bright spot, with economists expecting the sector to expand by 4.7% in the third quarter from the prior year.

For the full year, the survey respondents expect Singapore’s gross domestic product to fall by 6%, said the MAS. That’s in line with the government’s forecast for a contraction of between 5% and 7%

Recovery on the cards

Singapore was one of the earliest countries outside China to be hit by the virus. As of Sunday, the country confirmed more than 57,000 cumulative infections — over 90% of those involved migrant workers living in cramped dormitories, data by the health ministry showed.

More than 56,000 of the total cases have recovered, while 27 died, said the health ministry. 

The Singapore government imposed a partial lockdown — which it called a “circuit breaker” — to contain the spread of the virus in April.

Today, most of those measures have been lifted and nearly all economic activities have resumed. The government has also allocated around 100 billion Singapore dollars ($73.26 billion) worth of stimulus to help businesses and households tide through the pandemic-induced crisis.

Economists in the MAS survey expect Singapore’s economy to continue recovering. They predict the economy could grow by 5.5% next year, the results showed. 

But around 90% of the respondents cited a potential worsening in the coronavirus pandemic as the biggest risk weighing down prospects for the Singapore economy, the survey found. Economists were also worried about U.S.-China tensions and slower-than-expected global economic recovery, the results showed.

On the flip side, containment of the coronavirus disease — or Covid-19 — due “for instance to the successful global deployment of a vaccine” was the most cited factor that would lead the Singapore economy to perform better than expected, said MAS.


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