Singapore GDP Forecast Downgraded Again... 'Worst Expected Since Founding'

[Asia Economy Reporter Naju-seok] Singapore is expected to record its lowest economic growth rate since its founding this year. The COVID-19 pandemic and lockdown policies have dealt a direct blow.

[Image source=Yonhap News]

On the 26th, Singapore's Ministry of Trade and Industry forecasted that Singapore's Gross Domestic Product (GDP) growth rate this year will remain between -4% and -7%. Previously, Singapore had projected a growth rate of -4% to 1% for this year, but it has been significantly revised downward. This is the lowest economic growth forecast since Singapore declared independence.

Gabriel Lim, Minister of Trade and Industry, said, "There is still uncertainty about the severity of the COVID-19 pandemic period," adding, "The economic recovery of not only Singapore but also the global economy remains uncertain."

Bloomberg pointed out that Singapore, which is highly dependent on overseas trade, has been severely impacted as both global trade and tourism have been hit by the COVID-19 pandemic. Singapore also announced its fourth economic stimulus package of the year on the same day.

Earlier, Singapore announced that its economic growth rate (annualized) for the first quarter was -4.7%. This was better than the market's forecast of -10.6% (annualized). The reason the economic downturn was less severe than initially predicted was due to strong demand for pharmaceuticals amid COVID-19, despite weakness in the electronics sector.

However, the prevailing analysis is that the economic situation will worsen from the second quarter. This is because lockdown measures have been strengthened due to the spread of COVID-19, which is expected to have caused greater economic damage. The Singapore government currently views the second quarter economic growth rate as dependent on whether the spread of COVID-19 can be contained. The direction of lockdown policies may vary depending on whether the spread of COVID-19 subsides.

Singapore expects the economic situation to continue in the second half of this year but is cautious. This is because a worsening employment market could become another source of economic instability.

This content was produced with the assistance of AI translation services.