Singapore Falls Into Recession As GDP Plummets

Singapore's economy suffered a record contraction in the second quarter, tipping it into recession and putting the city-state on course for its worst ever slump this year as the coronavirus outbreak extracts a heavy toll on business.

The grim numbers underscore the sweeping worldwide impact of the Covid-19 pandemic and suggest a rough first half for the global economy.

Gross domestic product (GDP) plunged by a record 41.2% in the three months ended March, on a quarter-on-quarter annualised basis, preliminary data from the Ministry of Trade and Industry showed on Tuesday, worse than economists' expectations for a 37.4% decline in a Reuters poll.

The sectoral impact was broadbased with the services and construction sector hardest hit. Construction, which ground to a near halt, plummeted 95.6% on a quarter-on-quarter annualised seasonally-adjusted basis.

"We were expecting these numbers to look quite dismal, although this is worse than what we had expected," said Steve Cochrane, economist at Moody's Analytics.

On a year-on year basis, GDP dived 12.6% versus economists forecast for a 10.5% contraction.

The manufacturing sector grew 2.5% from a year ago, mainly due to a surge in output in biomedical sector, though that was still lower than the 8.2% rise in the first quarter.

The GDP slump marked the second consecutive quarter of contractions for the global finance hub – having declined a revised 0.3% year-on-year in the first quarter and 3.3% quarter-on-quarter – meeting the definition for a technical recession.

Analysts had expected a deep second-quarter contraction due to a lockdown between April and June, in which most workplaces closed to curb the spread of the virus.

The government expects full-year GDP to contract in the range of -7% to -4%, the biggest downturn in its history. (Reuters)