Singapore’s Q1 GDP contracts by 0.7%; 2020 growth forecast lowered

SINGAPORE (ICIS)–The Singapore economy contracted by 0.7% year on year in the first quarter, the first contraction since the global financial crisis, partly weighed by the output decline in the chemicals cluster, official data showed on Tuesday.

The first-quarter contraction reverses the 1.0% growth seen in the fourth quarter of 2019, the Ministry of Trade and Industry (MTI) said in a statement.

The manufacturing expanded by 6.6% in the first quarter, reversing the 2.3% contraction in the previous quarter, boosted by the strong surge in output in pharmaceuticals.

The construction sector contracted by 4.0% year on year, a reversal from the 4.3 % expansion in the previous quarter.

The outlook for the Singapore economy has weakened further since March, as  the economy will be adversely affected by the sharper-than-expected slowdown in many of Singapore’s key markets, as well as more prolonged supply chain disruptions, the MTI said.

The “circuit breaker”  measures implemented to curb the spread of COVID-19 in Singapore, which include the closure of most workplace premises, have further dampened domestic economic activity, along with domestic consumption.

Also, sectors like construction and marine & offshore engineering have been severely affected by manpower shortages due to the outbreak of infections  among foreign workers, especially those living in foreign worker dormitories.

The GDP growth forecast for Singapore for 2020 has been downgraded to “-7.0 to -4.0%”, from “-4.0 to -1.0%”, the MTI said.