S’pore enters technical recession as GDP in Q2 falls 12.6% on year

Singapore's economy shrank by 12.6% year-on-year in the second quarter as circuit breaker measures to stem the coronavirus pandemic took their toll, the Straits Times reported on Tuesday quoting advance estimates from the Ministry of Trade and Industry (MTI).

The decline in the gross domestic product (GDP) much worse than in the first quarter when GDP turned negative for the first time in a decade with the economy contracting by a revised 0.3%.

MTI said the GDP plunge was due to the circuit breaker measures that were implemented from April 7 to June 1 to slow the spread of COVID19 as well as weak external demand amid a global economic downturn.

On a quarter-on-quarter basis, the economy shrank a record 41.2% in the three months to June -- entering a technical recession for the first time since 2009. A technical recession refers to two straight quarters of quarter-on-quarter contraction.

Trade and Industry Minister Chan Chun Sing said the numbers show the extent of the challenges facing Singapore amid the pandemic and the effort required to restore the economy, adding that the figures were expected, according to the

Straits Times.

MTI in May forecast a full-year contraction of 7% to 4% -- making the current recession Singapore's worstever since independence in 1965.

The second-quarter slump was led by the construction sector that shrank by 54.7% on a year-on-year basis, a significant deterioration from the 1.1% decline in the first quarter.

The services-producing industries contracted by 13.6% on a year-onyear basis in the second quarter, steeper than the 2.4% decline in the previous quarter.

The only bright spot in the economy was the manufacturing sector that grew by 2.5% year on year in the April to June period.

However, the growth was slower than the 8.2% pace achieved in the first quarter.