Will Zika outbreak sting Singapore economy’s full-year growth?

Over 409 cases are already recorded as of October.

With its slowdown, the Singapore economy must not only be mindful of external headwinds as it should also brace for internal downside risks posed by the recent Zika outbreak.

According to a report from Maybank KimEng, the first Zika case in Singapore was reported in August 27 this year and has since ballooned to 409 as of October.

The brokerage firm believes that the main impact will be on tourist arrivals and related activities like retail sales and hotel accommodations.

"Australia, UK, Taiwan and South Korea have issued travel advisories for travelers to Singapore," Maybank said.

The firm cited the SARS epidemic in 2003, when tourist arrivals dropped sharply by -19.8% during the year.

Based on a separate report by OCBC Investment Research, Singapore reported that 238 people had been infected by SARS while 33 of which died in the span of 5 months.

However, as the numbers of reported Zika cases have already slowed in the recent weeks, Maybank said the outbreak has already been contained and could only hurt the economy a little.

"Our real GDP growth forecast of +1.8% for both 2016 and 2017 stays for now. We are mindful of the external headwinds, namely uncertainties on major economies’ monetary policies and politics, the future of QE and negative interest rate policies in Eurozone and Japan, US Presidential Election, and Brexit."

OCBC had the same sentiment, saying that as long as the number of cases rests under 500, impact will be milder than that of the SARS epidemic.

To recall, advanced GDP estimate revealed that real GDP growth slowed to 0.6% in 3Q16, with services sector posting its third quarter of contraction at 0.1%.

Photo from Ministry of Communications and Information.