S’pore Economy May Contract By 7% GDP, Could Be Nation’s Worst Recession Since Independence

Singapore Predicted To Have 4-7% GDP Contraction By MTI

The Ministry of Trade and Industry (MTI) just reviewed their previous prediction for Singapore’s economic performance on 26 May, predicting a 4-7% contraction in gross domestic product (GDP).

Previously, the contraction was projected to fall between 1-4%.

Seeing as the previous largest contraction was a 3.1% contraction in 1964, this is forecast to be Singapore’s worst recession since independence, reports The Business Times (BT).

MTI predicts up to 7% fall in GDP

The worsened outlook comes due to 3 main reasons.

Firstly, long-term supply chain disruptions and “sharper-than-expected slowdown” in these sectors:

• Manufacturing
• Transport
• Storage
• Wholesale trade

Next, the longer-than-expected ‘Circuit Breaker’, which took a toll on retail and consumer-facing industries, as well as companies who were unable to implement work from home arrangements productively.

Lastly, manpower shortages in construction and engineering industries, due to the Covid-19 outbreak among migrant workers and their Stay-Home Notice (SHN) arrangements.

Negative repercussions from global economy

Second waves of infections occur in major economies like the United States of America and Europe may cause shocks in the global supply chain.

Singapore would inevitably be impacted by the global crunch, and even experience more financial market instability, as investors may lose confidence in authorities’ capacity to respond.

Not the worst prediction to date

Though the forecast is looking gloomy, BT reminds us that this isn’t Singapore’s worst economic prediction ever.

In 2009, during the Global Financial Crisis, Singapore was predicted to experience a 9% contraction, but came out with a 2% fall in GDP instead.

Then again, our circumstances now are different, and it’s not certain how long our sectors will be affected by the restrictions.

Anticipate the Fortitude Budget later today

Our biomedical manufacturing sector, as well as IT sector are experiencing growth during this period, given the increased demand for pharmaceuticals and boom in IT & Communications needs.

If domestic consumption improves, we may just defy all odds and emerge from the crisis like in 2009.

Hopefully, the Fortitude Budget announced later today (26 May) brings Singaporeans more stability with their jobs, and helps us weather the storm.

Featured image by MS News.