On Monday, Singapore cut its growth forecast for 2020 as the country struggles with one of the highest numbers of coronavirus cases outside mainland China.
The Ministry of Trade and Industry (MTI) expects the Singapore economy to expand by around 0.5% this year. MTI downgraded its estimate range for the change in annual gross domestic product to between -0.5% and 1.5%. That is worse than the earlier projections of growth between 0.5% and 2.5%.
“The (earlier) forecast was premised on a modest pickup in global growth, along with a recovery in the global electronics cycle, in 2020. Since then, the outbreak of the coronavirus disease 2019 (COVID-19) has affected China, Singapore, and many countries around the world,” MTI said in a statement.
Briefly, the virus outbreak could affect the Singapore economy in the following ways:
- Outward-oriented sectors, such as manufacturing and wholesale trade, will be buffeted by weaker growth in Singapore’s major demand markets, including China.
- The tourism and transport sectors have been “badly affected” by “a sharp fall” in tourist arrivals, especially those from China.
- A probable decline in domestic consumption as people cut back on activities like shopping and dining out.
“As the COVID-19 situation is still evolving, MTI will continue to monitor developments and their impact on the Singapore economy closely,” said the ministry.
According to the Ministry of Health, Singapore has reported 77 confirmed coronavirus cases as of Monday noon. Of those, 24 have been discharged.
The republic was also among the worst hit by the global SARS epidemic in 2003. And on Friday, Prime Minister Lee Hsien Loong said the economic shock from the coronavirus disease—formally named COVID-19—has already surpassed that of SARS.
Lee also hinted at the possibility that Singapore could enter a recession as a result of the recent virus outbreak.
The Singapore government has announced several steps to help affected sectors weather through. The government is expected to unveil one of its most generous budgets yet to soften the economic blow from the outbreak.
In the fourth quarter of last year, Singapore’s economy grew by 1% year-over-year—better than the earlier forecast of 0.8%, said the Ministry of Trade and Industry.
For the entire 2019, the Southeast Asian economy grew by 0.7%. That is the slowest growth Singapore has recorded since 2009.
The main drag on Singapore in the October-to-December quarter was manufacturing. The sector shrank by 2.3% from a year ago.
Meanwhile, the construction sector grew by 4.3% year-over-year in the fourth quarter.