Singapore: Economy contracts in Q1 2020 due to Covid-19 outbreak
The economy contracted sharply in the first quarter of this year according to an advanced estimate. In the three months ending in March, the economy contracted 2.2% year-on-year (Q4: +1.0% year-on-year) and fell 10.6% on a quarter-on-quarter seasonally-adjusted annualized (SAAR) basis (Q4: +0.6% SAAR). The result reflects the economic impact of the global Covid-19 pandemic.
Manufacturing output dropped 0.5% over a year ago in the first quarter; the sector suffered from drops in electronics and chemicals output as external demand was dragged on by the coronavirus. The health crisis also spilled over into the construction sector, where output fell 4.3% year-on-year. This came on the back depressed private-sector activity amid supply chain disruptions and delays in the return of foreign workers owing to government-imposed lockdowns and travel restrictions. Services producing firms were also hurt by the Covid-19 outbreak and government containment measures.
The economy is expected to contract this year, although the outlook remains uncertain due to questions surrounding the longevity and severity of the coronavirus pandemic, which will continue to disrupt supply chains, depress trade and demand, and weigh on tourism. The impact of the pandemic remains hard to quantify at this stage and downward forecast revisions are likely in the months ahead.