While the manufacturing sector shrank by 23.1 per cent on-quarter, the construction sector almost vanished with a contraction of 95.6 per cent in the second quarter.
Amid the estimates of a coronavirus-led global recession in the current year, Singapore is hit by a major economic contraction in the second quarter. The country’s Q2 FY2020 GDP shrank by 41.2 per cent on-quarter, according to the Ministry of Trade and Industry, Singapore. The massive blow on the economy can be majorly attributed to the shrinking construction sector in Singapore. While the manufacturing sector shrank by 23.1 per cent on-quarter, the construction sector almost vanished with a contraction of 95.6 per cent in the second quarter.
The official statement of the Singapore government said that shrinkage in the economy is caused due to the Circuit Breaker (CB) measures that were implemented from 7 April to 1 June to arrest the spread of Covid-19. The measures included the suspension of non-essential services and closure of most workplace premises.
The services sector has also taken a severe hit, contracting by 37.7 per cent on-quarter. Within services, tourism-related sectors such as 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.
The free, innovative, competitive, and business-friendly economy of Singapore is highly globalised and largely depends on trade. Amid a disruption in the supply chain due to the global lockdown and travel restrictions, the fundamentals of Singapore’s economy could not bear the headwind coming from the external market and falling internal demand. Though there have been signs of a substantial pickup in activity in the third quarter, it is not expected that Singapore’s economy will return to positive growth until the first quarter next year, according to Bloomberg economists. It is also estimated that the full recovery for this transport hub will require the normalisation of global travel and trade.
Meanwhile, the early figures of Singapore have also alerted other nations to watch their economic situation as various international agencies have predicted a major recession this year. Though the green shoots of revival are visible in some of the countries, the unavailability of the coronavirus vaccine and the rising cases of Covid-19 have still kept the near-term economic outlook unstable.