Singapore economy widely expected to shrink by 7%

Singapore’s economy, a bellwether for global trade, could shrink by as much as 7.0 percent in 2020, as the coronavirus pandemic throttles demand, the government said Tuesday.

The trade ministry downgraded its forecast as official data showed gross domestic product (GDP) fell by 0.7 percent year-on-year in the first quarter to March, and by 4.7 percent compared with the previous quarter.

Like many other countries, Singapore has ordered the closure of most businesses, advised people to stay at home, and banned large gatherings.

Officials say they may start relaxing the rules from early June but many restrictions will remain in effect.

Lockdowns to contain the virus in major markets such as the US, Europe and China have crippled demand for exports, and a halt in international air travel has hammered Singapore’s key tourism sector.

“There remain significant uncertainties in the global economy,” the trade ministry said in a statement.

The economy is now expected to contract by up to 7.0 percent instead of 4.0 percent as projected in March “in view of the deterioration in the external demand outlook” and the partial lockdown imposed domestically, the ministry said.

“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,” it warned.