S’pore Economy Shrunk By 41.2% In Second Quarter of 2020
Singapore entered a technical recession after its economy contracted 41.2% in the second quarter from the previous three months, according to a press release from the Ministry of Commerce and Industry.
Weak external demand in a context of global economic slowdown, as well as the “circuit breaker” measures implemented from April 7 to 1
June to slow the spread of COVID-19, which included the suspension of non-essential services and the closure of most workplaces, contributed to the contraction.
The manufacturing sector grew 2.5% year over year in the second quarter, mainly due to a large increase in production in the biomedical manufacturing sector.
For example, Covid-19 test kits were mass produced by local biomedical companies to meet demand for testing.
However, weak external demand and disruptions to the workplace during the breaker period in the chemical, transportation engineering and general manufacturing segments lowered the figure.
Overall, the manufacturing sector fell 23.1%, a sharp reversal from the 45.5% expansion in the previous quarter, which had grown 8.2%.
The construction sector, which contracted 54.7% year-on-year in the second quarter, is also severely affected by the measures taken by circuit breakers. The previous quarter recorded a 1.1% drop.
A halt to most construction activities during the period, as well as labor disruptions to curb the spread of COVID-19, including movement restrictions in the dormitories of foreign workers, contributed on the decline.
As a result, the construction sector fell 95.6% in the second quarter, much worse than the 12.2% contraction recorded in the previous quarter.
Service-producing industries contracted 13.6% year-over-year in the second quarter, more than the 2.4% decline in the previous quarter.
In services, tourism-related sectors such as accommodation and
the airline industry has been severely affected by international and domestic travel
restrictions that halted visitor arrivals and air travel.
At the same time, at national level, the service sectors such as catering, retail and business services were significantly affected by the measures.
In particular, the F&B sector has seen many store closings and the retail sector has seen a multitude of bankruptcies such as sportswear retailer Sportslink, minimalist lifestyle brand MUJI and supplement retailer CNG.
Service-producing industries declined 37.7% in the second quarter, continuing the 13.4% decline recorded in the previous quarter.
A “slow and uneven” economic recovery
According to Minister of Trade and Industry Chan Chun Sing, Singapore’s economic recovery in the coming months will be “difficult”, with a “slow and uneven” course.
“The figures clearly reflect the extent of the challenges facing our economy in the midst of the COVID-19 pandemic and the hard work ahead of us to restore the economy,” said Minister Chan in a Facebook message.
His comments came after the release of preliminary GDP data, adding that the figures were expected.
“The road to recovery in the coming months will be difficult. We expect the recovery to be a slow and uneven journey, as external demand continues to be weak and countries are fighting the second and third waves of epidemics by re-establishing localized blockages or more stringent safe distancing measures “, he added.
In April, approximately 3,800 businesses closed, compared to an average of 3,700 registered in the same month in the past five years.
In addition, since the reopening of phase 2 on June 19 and as more and more people return to the workplace, workplace infections have gone from 22% before phase 2 to 36% now.
As a result, this could delay phase 3 of the reopening and, subsequently, the recovery of the Singapore economy.
Featured Image Credit: Gov.sg
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