“For now, unemployment rates and retrenchments remain lower than in previous downturns … However, labour market conditions are likely to worsen in the upcoming quarter, given the sharp fall in demand globally as well as in Singapore as firms adjust to circuit breaker measures.”

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Lee Ju Ye, an economist at Maybank Kim Eng, suggested full-year lay-offs in Singapore could reach 150,000 to 200,000. “Q2 will be the period that all the retrenchments happen because of the partial lockdown in place,” she said.

While Lee expects full-year unemployment to come in at about 5.5 per cent, Selena Ling, head of treasury research and strategy at OCBC Bank, said the current number would inch up to 4 per cent by the end of 2020, and a domestic recession was “baked in the cake”.

But there could also be knock-on effects, Lee said, suggesting these redundancies would in turn hurt the rental market for private flats as more foreigners are forced to leave the country.

“Our working assumption is that roughly 60 per cent of retrenchments will be foreigners, while the remaining 40 per cent will be locals,” she said.

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“The Covid-19 situation is still in a state of flux and depends on how long the [circuit breaker] lasts and how generous the Singapore government wants to be, such as continuing to extend the Jobs Support Scheme (JSS) and foreign worker levy rebates, which are currently partially offsetting the firms’ pain points,” said Ling.

“Firms have to adjust to this new reality even when recovery has not come back yet. They would still have to pay their bills,” Lee said, adding that some business owners would fire employees after the government’s wage subsidy expires. Others, who can hold on to their staff as long as they can, would probably consider wage cuts.

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Lee warned of another problem that employers face: even if Singapore is on track to ease its partial lockdown in June, the bleak economic outlook would spur consumers to save instead of spend money. “Consumer-side demand would fall, and I think discretionary spending has already plunged quite a bit, items like cars and furniture,” she said.

Charmaine Low, who owns a salad shop at a neighbourhood mall in Singapore, voiced similar concerns. Business has plunged by about 85 per cent since the outbreak started, and even though the shop is receiving more delivery orders during this period, it relies largely on office workers. Low is worried there will be spillover effects even when the partial lockdown eases, and hopes to expand the shop’s online and delivery presence.

Wednesday’s unemployment figures come a day after Singapore’s central bank flagged the possibility of a deeper-than-expected recession. “There remains significant uncertainty over the severity of the downturn, as well as the eventual recovery,” the Monetary Authority of Singapore said in its semi-annual macroeconomic review.

Authorities had already downgraded the full-year growth forecast to a range of -1 to -4 per cent, but Heng Swee Keat, the country’s finance minister, warned a prolonged pandemic would result in a more severe downturn. “We must continue to ensure that our monetary, financial, fiscal and regulatory policies work tightly to ease the impact on businesses and households,” he wrote on Facebook on Tuesday.

Similarly, economists have slashed their full-year forecasts. Ling said a 6 to 10 per cent contraction “could not be ruled out” if business and consumer confidence were dented. Seah expects a full-year contraction to come in at 5.7 per cent. He cited a list of downside risks, including a sharp plunge in tourist arrivals, retail sales, as well as the implementation of the partial lockdown, which he said would be a “nail in the coffin” for local businesses.

All three of Singapore’s banks are expected to see profit declines for the first time since 2016 as they set aside cash for a potential spike in bad loans, Bloomberg reported, adding that banks are also contending with falling interest rates and slowing loan growth, and the crash in oil prices may trigger defaults among local firms that cater to the energy sector.

“That said, should Singapore fail to contain the spread of the virus even after the extension of the circuit breaker and hence forced to extend the quasi lockdown further, or if there is a re-emergence of a second wave of infections across the globe … economic growth could be pushed even deeper into the red,” Seah said.