Covid-19 continues to show that no matter how wealthy or prosperous a nation is – no one is immune to the intangible effects of the pandemic, and nothing could've prepared them for the losses that would ensue following the worldwide lockdown measures.
In Singapore, we are suffering a deeper recession in the second quarter than estimated earlier, which has prompted the Government to adjust its growth outlook for the year to an all time low – the lowest it has been since our country gained its independence 55 years ago.
Earlier predictions by the Ministry of Trade and Industry (MTI) stated the economy shrinking between 4 and 7 percent, but that has since been revised to a gross domestic product (GDP) contraction of between 5 and 7 percent.
Initial predictions also stated that the economy would shrink by 12.6 percent in the second quarter compared to the same time period last year, but the newly-downgraded numbers point to a 13.2 percent contraction.
On a quarter-on-quarter basis, the Singaporean economy saw a 13.1 percent contraction – much sharper than the 0.8 percent fall in the first quarter.
And the updated second-quarter decline will bring GDP contraction in the first half of 2020 to 6.7 per cent year on year, worse than the earlier estimate of a 6.45 percent drop.
Mr Chan Chun Sing, the Minister for Trade and Industry said: “This is our worst quarterly performance on record. The forecast for 2020 essentially means the growth generated over the past two to three years will be negated.”
“I know that some are still hoping for a quick recovery, and a return to the familiarity of the old normal. The painful truth is this – we are not returning to a pre-Covid world, recovery will be some time yet and recovery is not likely to be smooth,” he added.
This is because there will continue to be significant uncertainties in the upcoming quarters. For example, the Covid-19 outbreak may take a turn for the worse again and countries can re-impose lockdowns or restriction measures. Adding on to that, Singapore's economy is also affected by geopolitical tensions and increased protectionism, and the reopening of international borders is likely to happen more gradually than expected.
The worst hit sectors were construction, transportation and storage, as well as accommodation and food services.
The construction sector contracted 59.2 percent in the second quarter compared to the same period last year, as almost all construction activities stopped during the circuit breaker due to a lack of manpower, as well as the surge of coronavirus cases among foreign workers.
As for the transportation and storage sector, the decimation of global air travel, a drop in sea cargo volume at the ports, and a sharp drop in the use of public transport caused the sector to shrink by 39.2 percent over the same period.
The accommodation and food services sector contracted by 41.1 percent in the second quarter compared to a year ago, due to a plunge in international arrivals and circuit breaker restrictions on dining-in activities.
However, there were also some industries that thrived during this period.
"In particular, the outlook for the electronics and precision engineering clusters has improved, as the stronger-than-expected demand for semiconductors and semiconductor equipment seen in the second quarter is expected to be sustained in the second half of 2020," says the MTI.
The finance and insurance sector also saw considerable growth thanks to the increased demand in digital payment processing services.
When asked about their forecast for the third quarter, MTI said the ministry expects a gradual recovery in the second half of the year, but for the year-on-year figures to still be negative. They also added that a few sectors are expected to expand in 2020, such as biomedical manufacturing cluster, finance and insurance, and information and communications.
Here's hoping that things will gradually look up soon.