Singapore: Revised data tones down economic impact of Covid-19 in Q1
May 27, 2020
Comprehensive data revealed that Singapore’s economy contracted at a more moderate pace than expected in the first quarter of the year. GDP variation was revised up from a sharp 2.2% year-on-year fall to a more moderate 0.7% decrease in Q1 (Q4 2019: +1.0% yoy). That said, the result still marked the worst reading since Q2 2009 as the economy reeled from Covid-19 fallout.
Q1’s downturn was nearly broad-based, with six of the nine broad-sub-sectors of the economy contracting. Activity in the construction sector plunged a revised 4.0% in Q1 (previously reported: -4.3% yoy), after growing 4.3% in Q4 2019, amid supply-chain disruptions and as travel restrictions hindered foreign employees from arriving. In addition, services sector activity dropped a revised 2.4% (previously reported: -3.1% yoy; Q4 2019: +1.5% yoy) on the back of a sharp fall in tourism and social distancing measures. In contrast, the manufacturing sector grew a robust 6.6%, which was revised up notably from the previously reported 0.5% contraction (Q4 2016: -2.3% yoy), thanks largely to the pharmaceutical industry which has benefited from a spike in demand due to the pandemic.
On a quarter-on-quarter seasonally-adjusted annualized (SAAR) basis, GDP fell a revised 4.7% in Q1 (previously reported: 10.6% SAAR), contrasting the fourth quarter’s 0.6% increase.
Looking ahead, the economy is expected to have deteriorated further in the second quarter, as the government’s circuit breaker measures led to widespread closures of business to contain the health crisis and as export demand shriveled.
Irvin Seah, senior economist at DBS, noted that they forecast the economy “to contract by 5.7% this year”. Expanding upon this point, Seah wrote: “The second quarter will be the worst in terms of headline GDP growth, and signs of recovery will become clearer in 2H20. More importantly, the pace of recovery will vary across industries and differ between companies. […] Many companies may not survive, while other may have to cut costs and trim headcounts. These will have significant implications on jobs, particularly given that the industries that are worst hit by the pandemic are also the ones that are relatively more labour intensive.”