Singapore's economy, a bellwether for global trade, could shrink by as much as 7.0 percent this year, as the coronavirus pandemic throttles demand, the government said Tuesday.
An empty street is pictured during restrictions put in place to halt the spread of the COVID-19 coronavirus in the central business district in Singapore on May 22, 2020. (Photo: AFP)
The trade ministry downgraded its forecast as official data showed gross domestic product (GDP) fell by 0.7 percent year-on-year in the first quarter to March, and by 4.7 percent compared with the previous quarter.
Like many other countries, Singapore has ordered the closure of most businesses, advised people to stay at home, and banned large gatherings.
Officials say they may start relaxing the rules from early June but many restrictions will remain.
Lockdowns to contain the virus in major markets have crippled demand for exports, and a halt in international air travel has hammered Singapore's key tourism sector.
"There remain significant uncertainties in the global economy," the trade ministry said in a statement.
"First, there is a risk that subsequent waves of infections in major economies such as the US and Eurozone may further disrupt economic activity," it said.
"Second, a growing perception of diminished fiscal and monetary policy space in many major economies could damage confidence in authorities’ ability to respond to shocks."
The economy is now expected to contract by up to 7.0 percent instead of 4.0 percent as projected in March "in view of the deterioration in the external demand outlook" and the partial lockdown imposed domestically, the ministry said.
"Notwithstanding the downgrade, there continues to be a significant degree of uncertainty over the length and severity of the COVID-19 outbreak, as well as the trajectory of the economic recovery," it warned.
Singapore's central bank in March eased monetary policy to support the virus-hit economy.