Saturday, 04 Apr 2020
BUSINESS
26/03/2020 10:17 AM

By Massita Ahmad

SINGAPORE, March 26  -- The Singapore economy contracted by 2.2 per cent on a year-on-year basis in the first quarter of 2020, reversing the 1.0 per cent growth in the preceding quarter.

The republic’s Gross Domestic Product (GDP) growth forecast for 2020 is further downgraded to -4.0 to -1.0 per cent.

These are based on advance estimates released by the republic’s Ministry of Trade and Industry (MTI) which computed largely from data in the first two months of the quarter.

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

MTI said the manufacturing sector contracted by 0.5 per cent on a year-on-year basis in the first quarter, moderating from the 2.3 per cent contraction in the previous quarter.

The performance of the sector was weighed down by output declines in the electronics and chemicals clusters, which more than offset output expansions in the biomedical manufacturing and precision engineering clusters.

The weakness of the sector likely reflects a fall in external demand as global economic activity has slowed due to the ongoing coronavirus disease 2019 (COVID-19) outbreak, it said.

The construction sector shrank by 4.3 per cent on a year-on-year basis in the first quarter, a reversal from the 4.3 per cent growth in the previous quarter.

The performance of the sector was weighed down primarily by a decline in private sector construction activities, said the ministry.

MTI noted that supply chain disruptions and delays in the return of foreign workers as a result of the lockdowns and travel restrictions implemented by other countries in response to the COVID-19 outbreak have also adversely affected some construction projects.

The services producing industries meanwhile contracted by 3.1 per cent on a year-on-year basis in the first quarter, reversing the 1.5 per cent growth in the fourth quarter of last year.

By sectors, the air transport, accommodation, food services and retail trade sectors shrank on the back of a sharp decline in tourist arrivals as well as a fall in domestic consumption as a result of the COVID-19 outbreak.

At the same time, the wholesale trade and other transportation & storage - water transport - sectors contracted due to the fall in external demand and supply chain disruptions.

The information & communications and finance & insurance sectors, however, posted positive, albeit more subdued, growth.

Taking into account the weaker-than-expected performance of the Singapore economy in the first quarter, and the sharp deterioration in the external and domestic economic environment since February, the GDP growth forecast for 2020 is further downgraded to -4.0 to -1.0 per cent.

The wider forecast range is to account for heightened uncertainties in the global economy, given the unprecedented nature of the COVID-19 outbreak, including the public health measures taken in many countries to contain the outbreak, said the ministry.

MTI will release the preliminary GDP estimates for the first quarter, including performance by sectors, sources of growth, inflation, employment and productivity, in its Economic Survey of Singapore in May 2020.

In February, MTI had downgraded the GDP growth forecast for 2020 to -0.5 to 1.5 per cent on account of the COVID-19 outbreak.

Singapore's Deputy Prime Minister and Minister for Finance, Heng Swee Keat, will deliver a Ministerial Statement on the Government’s additional support measures for workers, businesses and households in response to the COVID19 pandemic this afternoon.

-- BERNAMA

 

 

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