Singapore’s economy has slumped into recession with a record plunge in GDP by almost 41.2 percent in the last three months. This is largely due to the extended lockdown imposed to contain COVID-19 spread in the nation.
Singapore's extended lockdown led to the shuttering of many businesses and a reduction in retail spending. The nation's GDP declined by 41. 2 percent in the last three months, which is the biggest quarterly contraction recorded.
In comparison to last year, Singapore's GDP fell by 12.6% in the second quarter. This was announced by Singapore's Ministry of Trade and Industry in a statement on July 14, 2020.
Impact |
| Singapore's entry into recession is a result of the deep blow to its economy in the wake of the COVID pandemic. The pandemic has not only impacted the nation's economy but the global economy and trade has also taken a big hit. There has been a major plunge in global trade, which in turn impacted the export-reliant manufacturing industry. The retailers in the nation witnessed a major fall in sales ever since lockdown measures were imposed in the last quarter. The Singapore government had projected an economic contraction of 4-7 percent. The government is, however, yet to provide a new economic forecast. Singapore is not the only nation that has been hit hard by the pandemic, Japan's GDP has been declining by more than 20 percent in the second quarter. China is the only nation in Asia that is expected to see a rebound in its economy. |
Recovery in sight?
According to Singapore's Trade and Industry Minister Chan Chun Sing, economic recovery is expected to be challenging and a slow process. He stated that that the road to recovery will be a slow and uneven journey, as external demand continues to be weak as countries are battling the second and third waves of COVID by reinstating lockdowns or stricter social distancing measures.
Singapore’s GDP report: Key Highlights
• Manufacturing fell by 23.1% on a quarter-on-quarter basis, in comparison to the growth of 45.5% in the first quarter. However, the sector grew by 2.5 percent on a year-on-year basis due to solid output in pharmaceuticals.
• The construction sector plunged by 95.6 percent a quarter-on-quarter basis and by 54.7 percent on a year-on-year basis.
• The services sector fell by 37.7% in the quarter and 13.6% on a year-on-year basis, as tourism businesses including airlines and hotels took a hit amid travel restrictions and strict lockdown measures.
• Singapore’s dollar also fell 0.2% to S$1.3930 against the USD at 1:35 p.m. local time.
Background
Singapore had initially largely controlled the coronavirus outbreak but later clusters in its migrant population led to a dramatic rise in infection numbers, making it one of the worst-hit countries in the Asia-Pacific region. The nation had imposed a strict lockdown till June to contain the virus, after which the restrictions were gradually eased.
Many businesses resumed operations from late June. However, border controls and social distancing measures are still in place thus, limiting mobility. Also, the businesses are not at previous levels as there is still no tourism due to global travel restrictions.
Singapore had recently conducted its General Elections, which saw the ruling People's Action Party (PAP) retain power but with a slightly reduced majority. Singapore was one of the very few nations to have conducted elections amid the COVID pandemic. Others include South Korea and Serbia.
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