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Singapore sees sharper economic slump as virus spreads globally

·4-min read
A man wearing a mask as a preventive measure against the spread of the COVID-19 coronavirus pushes a trolley in the Raffles Place financial business district in Singapore on April 14, 2020. (Photo by ROSLAN RAHMAN / AFP) (Photo by ROSLAN RAHMAN/AFP via Getty Images)
Raffles Place financial business district in Singapore on April 14, 2020. (PHOTO: ROSLAN RAHMAN/AFP via Getty Images)

By Abhishek Vishnoi and Faris Mokhtar

(Bloomberg) -- Singapore is bracing for a sharper economic contraction this year than an earlier forecast of a slump of as much as 4%, as the coronavirus pandemic continues to spread globally and disrupts supply chains.

The city-state is “very likely” to see a sharper fall in GDP, trade and industry minister Chan Chun Sing said Thursday in an interview with Bloomberg Television’s Haslinda Amin. “We are really concerned that worldwide, this is going to lead to a more serious problem than many had anticipated just a month ago.”

The minister refrained from giving a new official forecast for GDP, but noted that connectivity among the major economies has been unsettled, hurting the short-term capacities and long term capabilities of countries. The country’s gross domestic product contracted an annualised 10.6% in the first quarter -- the most in a decade -- with the government in March forecasting a contraction of 1%-4% for the year.

Singapore’s equity benchmark, the Straits Times Index, dropped as much as 0.4% as of 10:59 a.m. compared with a gain in the MSCI Asia Pacific Index, amid worries the city-state is heading for a deeper economic contraction after it extended a partial lockdown.

Singapore on Tuesday extended its so-called “circuit-breaker” measures for a further four weeks until June 1 in a bid to “decisively” bring down coronavirus cases within the community. Schools remain shut, foreign workers are now confined in their dormitories and more workplaces are closed, with only the most essential services operating.

There could be some delays to projects in the shipyard and construction sector, though the city-state hopes to regain momentum once the crisis abates, Chan said. He added the country hopes to “progressively reopen” its economy in about a month’s time and said Singapore is planning “much more testings” for the entire population.

Citigroup Inc. economists on Tuesday warned that Singapore will witness a deeper recession because of the extended circuit breaker, with the economy now seen contracting 8.5% for the year.

Initially seen as a global model for how to contain the pandemic, Singapore now has the most cases in Southeast Asia -- more than 10,000 -- as Covid-19 infections among foreign laborers living in densely packed dormitories have surged.

There could be some delays to projects in the shipyard and construction sector, though the city-state hopes to regain momentum once the crisis abates, Chan said. He added the country hopes to “progressively reopen” its economy in about a month’s time and said Singapore is planning “much more testings” for the entire population.

Citigroup Inc. economists on Tuesday warned that Singapore will witness a deeper recession because of the extended circuit breaker, with the economy now seen contracting 8.5% for the year.

Initially seen as a global model for how to contain the pandemic, Singapore now has the most cases in Southeast Asia -- more than 10,000 -- as Covid-19 infections among foreign laborers living in densely packed dormitories have surged.

‘Work Very Hard’

The government has committed more than S$60 billion ($42 billion) in fiscal support and the Monetary Authority of Singapore has undertaken unprecedented easing steps to cushion the blow for businesses and households.

Chan said that Singapore’s aim is to keep the fatality rate from the virus “very low,” bring new daily infections in the community to single digit or the low teens as well as control the dormitories’ infections by the end of the extended lockdown. So far, the country has recorded 12 deaths from the virus, and while infections among the local population appears to have stabilized, the number of unlinked cases continue to be a concern.

“We will have to work very hard,” Chan said. “We are always reminded that when we are doing well, never be complacent, and when the chips are down, we should never be discouraged.”

Here are more comments from Chan’s interview:

Confidence in lifting lockdown on June 1

“I think it’s too early to say. We will continue to take calibrated measures as we have done over the entire period. As circumstances evolve, we will make sure that we put in place the measures, not just to take care of the situation at hand, but to also prevent the situation going forward.”

Singapore Elections

“Our energy is now entirely focused on tackling the crisis. As to when we should hold an election, that will be the prerogative of the Prime Minister. But at this point in time, we are focused on making sure that the health of our people, including our migrant workers’ community, is well taken care of and that our economy will be able to progressively recover. At the same time, we are also focused on building the long term capabilities of our country.”

(Updates with more comments from minister throughout story)

© 2020 Bloomberg L.P.

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