According to Singapore’s Ministry of Trade and Industry, the outlook for the economy has weakened further since March. First, outward-oriented sectors such as manufacturing, wholesale trade and transportation and storage will be adversely affected by the sharper-than-expected slowdown in many of Singapore’s key markets, as well as more prolonged supply chain disruptions.
Second, the pandemic measures implemented to curb the spread of COVID-19 in Singapore, which include the closure of most workplace premises, have further dampened domestic economic activity, along with domestic consumption. In particular, consumer-facing segments such as retail and food services have been negatively affected by the measures.
Firms across most sectors, especially those that cannot operate fully from home, have also been working under reduced capacity as a result of the workplace closures and the fall in demand.
Third, sectors like construction and marine and offshore engineering have been severely affected by manpower shortages due to the outbreak of infections among foreign workers, especially those living in foreign worker dormitories.
Nonetheless, there are pockets of resilience in the Singapore economy. Within the manufacturing sector, the biomedical manufacturing cluster is expected to continue to expand, supported by the production of pharmaceutical and biological products. Among the services sectors, the information & communications sector is also projected to grow given firms’ resilient demand for IT and digital solutions.
In view of the deterioration in the external demand outlook for Singapore as well as the expected economic impact of the pandemic measures, the GDP growth forecast for Singapore for 2020 is downgraded to -7.0 to -4.0 per cent, from -4.0 to -1.0 per cent.
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, in both the global and Singapore economies.