Singapore’s record recession was deeper than first thought in the second quarter, data showed on Tuesday, signalling a lengthy path to recovery as the coronavirus pandemic dealt a major blow to Asia’s trade-reliant economies.
Gross domestic product (GDP) fell by a record 13.2 percent year-on-year in the second quarter, revised government data showed, versus the 12.6 percent drop seen in advance estimates.
The country has been hit hard by the virus, remaining under lockdown for most of the second quarter to curb the spread of the virus.
“The painful truth is this – we are not returning to a pre-COVID world. Recovery will be some time yet,” said trade minister Chan Chun Sing.
The government said it now expects GDP to contract by between 5 and 7 percent over the whole of 2020, versus its previous forecast for a 4 to 7 percent decline. The transport and tourism hub is facing the biggest downturn in its history, expected to wipe out years of previous economic expansion.
“The forecast for 2020 essentially means the growth generated over the past two to three years will be negated,” said Chan, adding that the data showed the economy’s worst quarterly performance on record.
The economy plunged 42.9 percent from the previous three months on an annualised and seasonally adjusted basis, also a record and larger than the 41.2 percent contraction in the government’s initial estimates.
The slump marked the second consecutive quarter of GDP contraction for the global finance hub – having declined 0.3 percent year-on-year in the first quarter and 3.1 percent quarter-on-quarter – meeting the definition of a technical recession.
‘Sluggish economic recovery’
The data pointed “to a slower and sluggish economic recovery,” said Chua Hak Bin, an economist at Kuala Lumpur-based lender Maybank.
He said strict border controls, physical distancing rules and foreign worker shortages will weigh on the pace of recovery, even though lockdown measures have been relaxed.
The Monetary Authority of Singapore (MAS), the country’s central bank, had eased its monetary policy in March, while the government pumped in nearly 100 billion Singapore dollars ($72bn) worth of stimulus to blunt the impact of the pandemic.
MAS chief economist Ed Robinson said on Tuesday that its monetary policy “stance remains appropriate including and forestalling a broadening or deepening of disinflationary pressures.”
Singapore is one of the world’s most open economies, with exports equating to about 200 percent of economic output.
The grim data comes as other large Asian economies, such as Japan, are also set to report steep descents into recession.
Meanwhile, South Korea’s exports extended double-digit declines in the first week of August.
Many countries were starting to re-tighten coronavirus measures after the emergence of new outbreaks, said Selena Ling, OCBC Bank’s head of treasury research and strategy.
“That is going to dampen, if not potentially kill off, any of the recovery hopes that people were looking forward to,” she said.