Singapore braced for recession as coronavirus forces economy to shrink most in 10 years and elections loom

Singapore’s first-quarter GDP fell 10.6 per cent from the previous three months and the government expects negative growth of between -4 and -1 per cent in 2020

With a recession on the cards, the government’s stimulus package to be announced Thursday will ensure some stability as the country prepares for elections, analysts said

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On a quarter-on-quarter basis, GDP contracted 10.6 per cent, the Ministry of Trade and Industry said in a statement. Photo: Reuters

Published: 8:19am, 26 Mar 2020Updated: 3:17pm, 24 Jun 2020

Singapore is expected to confront its first full-year recession in about two decades, the trade ministry said on Thursday, as analysts suggested the economic crisis fuelled by the coronavirus pandemic could prompt Prime Minister Lee Hsien Loong to call a general election.

The Ministry of Trade and Industry (MTI) on Thursday downgraded its growth forecast for this year to a range of -4 per cent to -1 per cent from -0.5 per cent to 1.5 per cent, after it reported dismal first-quarter results.

Singapore’s economy contracted by 2.2 per cent year-on-year in the first quarter of 2020, according to flash estimates from MTI, and shrank by 10.6 per cent on a quarter-on-quarter, seasonally adjusted annualised basis.

“As the global Covid-19 situation is still evolving rapidly, there remains a significant degree of uncertainty over the severity and duration of the global outbreak, and the trajectory of the global economic recovery once the outbreak has been contained,” MTI said in a statement.

This is the second time this year that the trade ministry has slashed its full-year growth forecast. In February, it downgraded its forecast from between 0.5 and 2.5 per cent, citing the fallout from the novel coronavirus outbreak on China’s economy and its effect on the region.