Singapore faced a economy recession in this second quarter, compared to three months before which is contracting a record 41.2% and facing its biggest setback this year when measures to lock down to prevent coronavirus from spreading further. Economists polled by Reuters had expected a drop of 37.4%, but the pandemic has taken its toll on the construction sector, which fell 95.6%.
On an annual basis, gross domestic product (GDP) fell 12.6%, according to preliminary data from the Ministry of Trade and Industry, Economists expected a contraction of 10.5%. The collapse in GDP marks the second straight quarter of contraction for wealthy city-states – after declining 0.3% yoy in the first quarter and 3.3% quarter-on-quarter – meeting the definition of a technical recession. City-states are expecting annual GDP in the range of -7% to -4%, the largest drop in history.
Reopening Economy To Boost Economic Activity
“With Singapore’s economy reopening, we are expected to see a moderate rise in economic activity in the third quarter. We believe the third quarter will show some improvement, but it will still be in contraction”said Selena Ling, head of research and financial strategy at OCBC Bank.
The government has injected nearly S $ 100 billion (US $ 72 billion) in stimulus measures to mitigate the effects of the pandemic. The People’s Action Party, which is extending its unbroken rules in last week’s election held amid a pandemic, has said protecting Singapore’s labor is its top priority.
Analysts expect the Southeast Asian economy to experience a deep contraction in the second quarter due to lockdown between April and June, dubbed “circuit breakers” by authorities, where most work places are closed to curb the spread of the virus.