SINGAPORE (BLOOMBERG) – Singapore is bracing itself for a sharper economic contraction this year than an earlier forecast of a slump of as much as 4 per cent, as the coronavirus pandemic continues to spread globally and disrupts supply chains.
The city-state is “very likely” to see a steeper fall in gross domestic product (GDP), Trade and Industry Minister Chan Chun Sing said on Thursday (April 23) in an interview with Bloomberg Television’s Haslinda Amin.
“We are really concerned that worldwide, this is going to lead to a more serious problem than many had anticipated just a month ago.”
The minister refrained from giving a new official forecast for GDP, but noted that connectivity among the major economies has been unsettled, hurting the short-term capacities and long-term capabilities of countries. The nation’s GDP contracted an annualised 10.6 per cent in the first quarter – the most in a decade – with the Government in March forecasting a contraction of 1 per cent to 4 per cent for the year.
Singapore’s equity benchmark, the Straits Times Index, dropped in volatile trade compared with a gain in the MSCI Asia-Pacific Index as of 3.53pm, amid worries the city-state is heading for a deeper economic contraction after it extended a partial lockdown and as it reported a fourth straight day of virus cases going above 1,000.
Singapore on Tuesday extended its so-called circuit breaker measures for a further four weeks until June 1 in a bid to “decisively” bring down coronavirus cases within the community. Schools remain shut, foreign workers are now confined in their dormitories and more workplaces are closed, with only the most essential services operating.
There could be some delays to projects in the shipyard and construction sector, though the city-state hopes to regain momentum once the crisis abates, Mr Chan said. He added the country hopes to “progressively reopen” its economy in about a month’s time and said Singapore is planning “much more testings” for the entire population.
Citigroup economists on Tuesday warned that Singapore will witness a deeper recession because of the extended circuit breaker, with the economy now seen contracting 8.5 per cent for the year.
Initially seen as a global model for how to contain the pandemic, Singapore now has the most reported infections in South-east Asia – more than 11,000 – as Covid-19 cases among foreign labourers living in densely packed dormitories have surged. It reported an additional 1,037 cases of coronavirus on Thursday, as authorities ramp up testing among the workers.
The Government has committed more than $60 billion in fiscal support and the Monetary Authority of Singapore has undertaken unprecedented easing steps to cushion the blow for businesses and households.
Mr Chan said that Singapore’s aim is to keep the fatality rate from the virus “very low”, bring new daily infections in the community to single digit or the low teens, as well as control the dormitories’ infections by the end of the extended lockdown. So far, the country has recorded 12 deaths from the virus, and while infections among the local population appear to have stabilised, the number of unlinked cases continues to be a concern.
“We will have to work very hard,” Mr Chan said. “We are always reminded that when we are doing well, never be complacent, and when the chips are down, we should never be discouraged.”
Here are more comments from Mr Chan’s interview:
Confidence in lifting lockdown on June 1: “I think it’s too early to say. We will continue to take calibrated measures as we have done over the entire period. As circumstances evolve, we will make sure that we put in place the measures, not just to take care of the situation at hand, but to also prevent the situation going forward.”
Singapore Elections: “Our energy is now entirely focused on tackling the crisis. As to when we should hold an election, that will be the prerogative of the Prime Minister. But at this point in time, we are focused on making sure that the health of our people, including our migrant workers’ community, is well taken care of and that our economy will be able to progressively recover. At the same time, we are also focused on building the long-term capabilities of our country.”