Singapore is a financial hub. However, due to the coronavirus pandemic, the local economy is expected to shrink in 2020. Based on the preliminary information provided by the local authorities, the economy of Singapore shrank by 2.2% in the first quarter of 2020 compared with the same period in 2019.
On Thursday, the country’s Ministry of Trade and Industry released a statement. According to this statement, the ministry expects that the local economy will shrink between 1.0% and 4.0% in 2020. Officials had to change the forecast, as last month they predicted that the local economy would fall between 0.5% and 1.5% when it comes to annual gross domestic product (GDP).
The ministry made the decision to downgrade its forecast due to the weaker than expected performance of the Singapore economy in the first quarter. According to the officials, the unprecedented nature of the coronavirus pandemic and its impact on the healthcare sector created serious problems for the economy.
It is important to mention that coronavirus continues to spread and the number of people affected by this disease surpassed 480,600. Unfortunately, this virus reached all continents. Authorities in Singapore and elsewhere had to close borders as well as to impose travel restrictions. As a result, steps taken by the government affected the economy. Moreover, many countries could enter a recession in 2020.
Local economy and a virus outbreak
Interestingly, Singapore was one of the first countries to provide data regarding the GDP in the first quarter of 2020. This data may help to analyze the economic impact not only in Singapore but in other states as well. For example, it will be possible to compare the results from Singapore with the result from the neighboring countries.
According to the Ministry of Trade and Industry, the economy contracted by 2.2% year-over-year in the first quarter. Moreover, when it comes to quarter-over-year the economy contracted by 10.6%.
Unfortunately, based on the preliminary information it was the worst year-over-year contraction since the first quarter of 2009.
Data released by the ministry surpassed the expectations. Economists expected the Singapore economy to contract by 1.5% year-over-year and 6.3% quarter-over-quarter.
Last but not least, the ministry released the preliminary information, based on data from January and February. The Ministry of Trade and Industry plans to publish more complete data on Singapore’s GDP in the first quarter in May. However, as can be seen from the preliminary data the state of the country’s economy is far from being ideal.