It’s been a rough week for bellwether Singapore.
Just 48 hours after reporting the biggest one-day spike in coronavirus infections since the outbreak began, and a mere 24 hours after announcing the closure of bars and cinemas in a bid to counter the spread, the city-state said GDP plunged the most in 10 years in the first quarter, a bad omen, to be sure.
The -10.6% annualized QoQ contraction was much worse than the 8.2% decline the market was looking for, as was the YoY print (-2.2% versus expectations of a 1.4% drop).
Construction plunged 23%, while the services sector shrank nearly 16% sequentially.
This is clearly not good news for other economies in the region, and, as alluded to above, it comes amid a spike in coronavirus cases and accompanying restrictions that will invariably serve to choke the economy further.
In addition to closing bars and theaters, officials are also canceling conferences and exhibitions and limiting gatherings outside the workplace to 10 people.
“The virus is not going to wait for us. It is continuing to spread”, National Development Minister Lawrence Wong warned, at a press briefing on Tuesday. The new cases mostly come from residents returning from overseas.
The government is enacting stimulus worth billions, but ultimately, this is just insult to injury.
Like South Korea, the city-state is coming off a year during which the local economy was menaced at various intervals by Sino-US trade frictions. Now, the relatively tiny, open economy is staring down a pandemic.
“Tourism demand is already gone. This will rub salt into the wound of the entertainment industry”, an economist at DBS Group lamented.
MAS “will surely need to ease aggressively”, said Khoon Goh, head of Asia research at Australia & New Zealand Banking Group, after the GDP numbers were released. “Singapore’s data today is a glimpse of what we can expect in other countries as they start to report their GDP numbers next month”.
The government said it now expects the economy to shrink 1% to 4% for the full year. That’s down from previous projections of 0.5% growth.
“As the global COVID-19 situation is evolving rapidly, there remains a significant degree of uncertainty over the severity and duration of the global outbreak, and the trajectory of the global economic recovery once the outbreak has been contained”, the Ministry of Trade and Industry remarked, adding that the balance of risks is skewed to the downside.
If this is a preview of what to expect across the region (and it probably is – Singapore has always been something of a coal mine canary), the next several months are going to be rough.