Singapore Warns Of Worst Slump Since Independence

Singapore's virus-hit economy could shrink by as much as 7 percent this year – the worst reading since independence – the government said on Tuesday, as it unveiled a fresh multi-billion dollar stimulus package.

The city-state is seen as a bellwether of the global economy, and the forecast historic contraction highlights the extreme pain being wrought on countries by the killer disease.

The warning came as Singapore's deputy prime minister unveiled a fresh support package worth S$33 billion for the troubled city, which has been crippled by months of lockdowns around the world.

The trade ministry's forecast – which was a downgrade from the maximum four percent contraction predicted in March – came as official data showed the economy shrank 0.7 percent on-year in the first three months of the year, while it reduced 4.7 percent from the previous quarter.

The ministry said the new estimate was made "in view of the deterioration in the external demand outlook" and the partial lockdown imposed domestically. A contraction of 7 percent would be the worst since the city's independence in 1965.

Shutdowns in major markets such as the United States, Europe and China have crippled demand for exports, and a halt in international air travel has hammered Singapore's key tourism sector.

Singapore has ordered the closure of most businesses, advised people to stay at home, and banned large gatherings. While officials say they may start relaxing the rules from early June, many restrictions will remain in place.

Deputy Prime Minister Heng Swee Keat, who is also the finance minister, announced in parliament the new package largely aimed at helping companies save jobs.

The government has so far earmarked more than S$90 billion, or 20 percent of GDP, to cushion the economic fallout from the virus, which has infected over 32,000 people in the city-state, the highest in Southeast Asia.

"It has been an unprecedented crisis that is still changing rapidly," Heng said, adding Singapore has the "fiscal resources to mount this response". (AFP)