Singapore will enter into a recession this year due to the coronavirus pandemic and the city-state’s economic growth could even dip below the forecast range of -4 to -1 per cent to record its worst-ever contraction, the country’s central bank said on Tuesday.
The Monetary Authority of Singapore (MAS) in its latest half-yearly macroeconomic review warned of job losses and lower wages, with significant uncertainty over how long and intense the downturn will be.
“The Singapore economy will enter into a recession this year, said the MAS in a 132-page report.
Depending on how the pandemic evolves and the efficacy of policy responses around the world, Singapore’s economic growth could even dip below the forecast range of -4 to -1 per cent to record its worst-ever contraction, said the MAS.
The grim prognosis comes as Singapore reels from the COVID-19 outbreak.
To date, nearly 15,000 people in Singapore have been infected with the disease and fourteen have died. Nearly 85 per cent of its infections are linked to foreign worker dormitories.
“At this juncture, there remains significant uncertainty over the severity of the downturn, as well as the eventual recovery. The materialisation of downside risks, that largely depends on the course taken by the pandemic and efficacy of policy responses around the world, could tip the growth outcome in Singapore below the forecast range, said the MAS.
Singapore’s economy is likely to contract more sharply in the second quarter, given the severity of the outbreak among its major trading partners, as well as the domestic circuit breaker measures that kicked in early this month, said MAS.
Beyond that, the outlook is fraught with uncertainty, Channel News Asia quoted the MAS as saying.
This is because Singapore’s prospects are hinged on external circumstances, such as the transmission and incidence of the virus, as well as the pace at which other countries recover from their own health and economic challenges, the central bank said.
Yet, there is a poor understanding of how the COVID-19 situation could evolve globally, it noted.
The MAS eased monetary policy last month as the economy faces its worst recession in its 55-year history. The COVID-19 pandemic knocked Singapore’s economy in the first quarter, when it shrank 2.2 per cent – its sharpest contraction since the 2009 financial crisis, The Star Online reported.
Singapore is going through a “circuit breaker” period to stem the spread of COVID-19. The period was originally scheduled to end on May 4 but has since been extended until Jun 1.
All non-essential workplaces have been closed and residents told not to leave their homes except to buy food and groceries or to exercise alone in the neighbourhood.