Singapore headed for recession: MTI forecasts

Advanced estimates on Q1 GDP showed a 2.2% contraction.

The Ministry of Trade and Industry (MTI) said that Singapore will be headed into recession after it has revised its 2020 GDP forecast from -0.5% to 1.5% in February estimates to -4% to -1%, a press release revealed.

This comes on the back of more countries putting border controls to curb the spread of the COVID-19 pandemic. Social distancing measures have also caused events to either be postponed or cancelled.

In MTI’s advanced estimates, GDP for Q1 contracted 2.2% YoY compared to the 1% growth posted in Q1 2019. On a QoQ basis, Q1 GDP crashed 10.6% QoQ from the 0.6% growth in Q4 2019.

The construction sector reversed its 4.3% growth in Q4 2019 to a 4.3% YoY drop in Q1, no thanks to a decline in private sector construction activities. Supply chain disruptions and delays in the return of foreign workers have also adversely affected some construction projects.

On a QoQ basis, the sector contracted by 22.9% from the 5.3% expansion in Q4 2019.

Meanwhile, the services industries contracted by 3.1% YoY, reversing the 1.5% growth in Q4 2019. Amongst segments, the air transport, accommodation, food services and retail trade sectors shrank on the back of falling tourist arrivals and domestic consumption.

MTI added that wholesale trade and other transportation and storage sectors contracted due to the fall in external demand and supply chain disruptions. In contrast, the information and communications as well as finance and insurance sectors posted positive, albeit more subdued growth.

On the other hand, the dip in the manufacturing sector moderated with a 0.5% YoY decline compared to the 2.3% slip in the previous quarter. The performance of the sector continues to be weighed down by output declines in the electronics and chemicals clusters despite the output expansions in the biomedical manufacturing and precision engineering clusters.