The Singapore economy logged a sharp contraction at the start of the year as the supply chain disruptions and travel restrictions following the outbreak of coronavirus weighed heavily on construction and services sectors.
Citing the weaker-than-expected performance of the city-state economy and the sharp deterioration in the external and domestic economic conditions, the ministry downgraded its outlook for 2020.
Gross domestic product shrank 10.6 percent on a quarter-on-quarter annualized rate in the first quarter, reversing a 0.6 percent rise in the fourth quarter of 2019, the Ministry of Trade and Industry reported Thursday.
On a yearly basis, the economy shrank 2.2 percent after expanding 1 percent in the preceding period.
The ministry lowered GDP growth forecast for 2020 to “-4.0 to -1.0 percent” from “-0.5 to 1.5 percent.” The wider forecast range is to account for heightened uncertainties in the global economy, given the unprecedented nature of the COVID-19 outbreak, the ministry added.
Deputy Prime Minister Heng Swee Keat is set to announce another stimulus package, later today. The central bank has brought forward its semi-annual monetary policy meeting to March 30.
The service sector contracted 3.1 percent as air transport, accommodation, food services and retail trade sectors shrank on the back of a sharp decline in tourist arrivals as well as a fall in domestic consumption as a result of the COVID-19 outbreak.
The construction sector output declined 4.3 percent on year. The ministry said supply chain disruptions and delays in the return of foreign workers as a result of the lockdowns and travel restrictions implemented by other countries in response to the covid-19 outbreak have also adversely affected some construction projects.
Due to declines in electronics and chemicals clusters, manufacturing output contracted 0.5 percent on year in the first quarter.