Singapore has entered a recession after flash figures by the Ministry of Trade and Industry (MTI) showed two straight quarters of both quarter-on-quarter and year-on-year contractions.
The Singapore economy has plummeted by 12.6 per cent on a year-on-year basis in the second quarter of 2020, based on advance estimates by the MTI released on 14 July 2020.
Economists had earlier predicted a 10.5 per cent fall.
According to the ministry, the contraction may be due to the circuit breaker measures implemented from 7 April 2020 to 1 June 2020 to slow the spread of COVID-19.
These included the suspension of nonessential services and closure of most workplace premises, as well as weak external demand amidst a global economic downturn precipitated by the COVID-19 pandemic.
On a quarter-on-quarter seasonally adjusted annualised basis, the economy shrank by 41.2 per cent in the second quarter, worsening from the the first quarter’s 3.3 per cent contraction.
Commenting on the figures, NTUC Assistant Secretary-General Patrick Tay said: “This figure also paints a sombre and worrying outlook for the Singapore economy for the rest of 2020. I therefore urge fellow workers to brace ourselves for a rough ride ahead. Ahead of the second quarter labour market figures which will be released end of this month, I expect there will be a sharp spike in retrenchments and unemployment figures as well.”
The manufacturing sector grew by 2.5 per cent on a year-on-year basis in the second quarter, slower than the 8.2 per cent growth in the previous quarter.
According to MTI, growth during the quarter was primarily due to a surge in output in the biomedical manufacturing cluster. It added that weak external demand and workplace disruptions during the circuit breaker period weighed on output in the chemicals, transport engineering and general manufacturing clusters.
Meanwhile, the construction sector contracted by 54.7 per cent on a year-on-year basis in the second quarter, a significant deterioration from the 1.1 per cent decline in the previous quarter.
The circuit breaker measures led to a stoppage of most construction activities during the circuit breaker period, as well as manpower disruptions such as movement restrictions at foreign worker dormitories.
On a quarter-on-quarter seasonally adjusted annualised basis, the construction sector shrank by 95.6 per cent in the second quarter. This contraction is far worse than the 12.2 per cent contraction in the first quarter.
The services industries contracted by 13.6 per cent on a year-on-year basis in the second quarter, steeper than the 2.4 per cent decline in the previous quarter.
Tourism-related sectors like accommodation and the air transport sector were severely affected by global and domestic travel restrictions, which brought visitor arrivals and air travel to a standstill.
On a quarter-on-quarter seasonally adjusted annualised basis, the services producing industries shrank by 37.7 per cent in the second quarter, extending the 13.4 per cent decline recorded in the preceding quarter.
