Singapore drastically downgraded its economic forecast for 2020 after its coronavirus-hit economy contracted in the first quarter of the year, official data showed on Tuesday.
The Singapore economy is now expected to shrink by between 4.0% and 7.0% this year, according to the Ministry of Trade and Industry. That's the third official downgrade in economic forecasts this year. The last projection was for a gross domestic product contraction of between 1.0% and 4.0%.
The ministry said in a statement that since announcing its last economic forecasts in March, "the disruptions to economic activity in major economies around the world have been more severe than expected."
It explained that lockdown measures aimed at containing the coronavirus disease — which has been formally named Covid-19 — have hurt economic activity in major economies such as the U.S., Europe and China. Such weakness would continue even after countries roll back those containment measures given that further waves of infections could emerge, said the ministry.
For Singapore, that means that outward-oriented sectors such as manufacturing, wholesale trade, and transportation and storage will be hit, while many consumer-facing companies in retail and food services have suffered as a result of containment measures domestically, the ministry added.
"Notwithstanding the downgrade, there continues to be a significant degree of uncertainty over the length and severity of the COVID-19 outbreak, as well as the trajectory of the economic recovery, in both the global and Singapore economies," it said.
The downgrade in economic forecasts came as the Southeast Asian economy registered a 0.7% contraction in the first quarter from a year ago, the ministry said. That's better than the official preliminary estimates of a 2.2% fall in GDP and the 1.5% contraction forecast by analysts in a Reuters poll.
On quarterly basis, Singapore's economy shrank by 4.7% — also better than the 7.4% contraction projected by a Reuters poll.
Here's how different sectors performed in the first quarter:
The city-state has reported one of the highest numbers of coronavirus cases in Asia. As of Monday, Singapore has confirmed 31,960 cases including 23 deaths, according to its health ministry.
Singapore's government imposed partial lockdown measures that it called a "circuit breaker" in early April, which include temporary closures of schools and most workplaces. The measures are set to be gradually rolled back next month.
To help the economy weather hits from the coronavirus outbreak, the Singapore government has announced three stimulus packages and extended some support measures to businesses when the so-called circuit breaker was prolonged beyond the initial one month.
The country's Deputy Prime Minister and Finance Ministry Heng Swee Keat is expected to announce more support for businesses and households later on Tuesday.