Singapore GDP contracted by 12.6 per cent in Q2 – MTI

by BERNAMA/ pic by BLOOMBERG

SINGAPORE – Singapore’s economy contracted by 12.6 per cent in the second quarter of 2020 due to the Circuit Breaker (CB) measures and the weak external demand amidst a global economic downturn precipitated by the COVID-19 pandemic.

In releasing the advance estimates, the republic’s Ministry of Trade and Industry (MTI) said the measures which were implemented for eight weeks from April 7, include the suspension of non-essential services and closure of most workplace premises.

Meanwhile, on a quarter-on-quarter seasonally-adjusted annualised basis, the economy shrank by 41.2 per cent in the second quarter, it said.

The advance Gross Domestic Product (GDP) estimates for the second quarter of 2020 are computed largely from data in the first two months of the quarter – April and May 2020 -.

They are intended as an early indication of the GDP growth in the quarter and are subject to revision when more comprehensive data become available.

They are intended as an early indication of the GDP growth in the quarter and are subject to revision when more comprehensive data become available.

MTI will release the preliminary GDP estimates for the second quarter, including performance by sectors, sources of growth, inflation, employment and productivity, in its Economic Survey of Singapore, next month.

Due to the Covid-19 outbreak, the republic’s economy is projected by the ministry to contract by 4-7 per cent in 2020.

Separately, Minister of Trade and Industry, Chan Chun Sing said the estimates figures are expected.

Citing the International Monetary Fund (IMF), he said global GDP to shrink by 4.9 per cent this year due to the impact of the pandemic, a larger decline than the contraction of three per cent it previously projected.

“The road to recovery in the months ahead will be challenging. We expect the recovery to be a slow and uneven journey, as external demand continues to be weak and countries battle the second and third waves of outbreaks by reinstating localised lockdowns or stricter safe distancing measures.

“Domestically, the pace of our recovery will also depend on how well we manage the public health situation and whether we are able to keep infections in the community low,” he updated on his Facebook page this morning.

On sectoral performance, MTI said the manufacturing sector grew by 2.5 per cent on a year-on-year basis in the second quarter, slower than the 8.2 per cent growth in the previous quarter.

Growth during the quarter was primarily due to a surge in output in the biomedical manufacturing cluster, it said.

On the other hand, weak external demand and workplace disruptions during the Circuit Breaker period weighed on output in the chemicals, transport engineering and general manufacturing clusters.

The construction sector meanwhile contracted by 54.7 per cent on a year-on-year basis in the second quarter, a significant deterioration from the 1.1 per cent decline in the previous quarter.

Construction output weakened on account of the Circuit Breaker CB 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.

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.

Within services, tourism-related sectors like accommodation and the air transport sector were severely affected by global and domestic travel restrictions, which brought visitor arrivals and air travel to a standstill.

Other outward-oriented services sectors such as wholesale trade and water transport were adversely affected by a fall in external demand as many countries around the world grappled with the COVID-19 pandemic.

Meanwhile, domestically oriented services sectors such as food services, retail and business services were significantly affected by the Circuit Breaker measures.

On a quarter-on-quarter seasonally-adjusted annualised basis, the services-producing industries shrank by 37.7 per cent in the second quarter, extending the 13.4 per cent decline recorded in the preceding quarter.