(Bloomberg) – Singapore’s economy had a bigger contraction in the second quarter than previously estimated, signaling a long recovery ahead for the trade-reliant nation.
Gross domestic product plunged an annualized 42.9% in the second quarter from the previous three months, according to final estimates from the Ministry of Trade and Industry released Tuesday. That was worse than a previous estimate of a 41.2% contraction and compares with a forecast of -43% in a Bloomberg survey of economists.
Ministry of Trade and Industry
The economy, which is already in a technical recession, is set to shrink 5% to 7% in 2020, compared with a previous official forecast of a 4% to 7% contraction, the ministry said. On a year-on-year basis, the economy shrank 13.2% in the second quarter, compared with an earlier estimate of -12.6%.
“The outlook for the Singapore economy has weakened slightly since May,” according to the MTI statement. “The subdued external economic environment will continue to pose a drag on several of Singapore’s outward-oriented sectors,” while the reopening of borders is likely to be slower than previously anticipated, it said.
The lockdown has pummeled retail and tourism businesses and crippled construction output, while exports have slumped because of weak global demand. Even though the economy has gradually reopened and the government has pumped in stimulus measures worth more than 19% of GDP, the recovery remains uncertain and companies are bracing for further job cuts.
The data showed sharp contractions in key industries:
Manufacturing declined an annualized 31.7% in the second quarter from the previous three months
Construction plunged 97.1%
Services contracted 37.4%
Singapore’s dollar was little changed at S$1.3746 against the U.S. dollar after the report.
The MTI said sectors reliant on foreign workers residing in dormitories will be slow to resume activity as the process to clear them for work has taken longer than expected. Most of Singapore’s virus infections have been among migrant workers living in those dormitories, several of which have been quarantined.
In a separate report, Enterprise Singapore revised its forecast for non-oil domestic exports upwards, projecting growth of 3% to 5% compared with a decline previously. Exports performed better than expected in the second quarter, due to sector-specific trends, the agency said. Non-monetary gold and pharmaceuticals, as well as electronic exports, grew in the quarter.
Singapore’s release follows reports last week that showed uneven economic performance across the region. Indonesia’s economy contracted in the second quarter for the first time in more than two decades, while the Philippines suffered its deepest plunge on record. At the same time, Chinese exports unexpectedly jumped in July amid a rekindling in global demand.