Economy to shrink by 11.8 per cent in second quarter: Survey

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Economists' poll estimates a 5.8% contraction in GDP for full year

Private forecasters have become more pessimistic about Singapore's economic outlook, a quarterly survey conducted by the Monetary Authority of Singapore (MAS) found.

The economy will shrink by 11.8 per cent in the second quarter from the same period in 2019.

For the full year, a 5.8 per cent contraction in gross domestic product (GDP) is likely, the poll of 23 economists and analysts showed yesterday.

The Government has cut its 2020 GDP forecast four times in as many months to a range of minus 4 per cent to minus 7 per cent - leaving no room to doubt that the Covid-19 pandemic will make this year's slump the worst recession since independence.

Growth declined 0.7 per cent in the first quarter compared with the same period last year, slightly less than the 0.8 per cent drop the MAS survey had projected in March.

The full-year prediction is down from an estimate of 0.6 per cent expansion in the previous survey and after the economy grew 0.7 per cent in 2019, the MAS said.

"The growth sentiment has clearly deteriorated," said Mr Barnabas Gan, economist at UOB Group.

But Mr Gan expects the slide in GDP to be limited at minus 4 per cent this year.

The forecasters in the MAS survey, however, believed that the outlook could be bleaker if a second wave of Covid-19 hits Singapore.

A resurgence of the disease topped the list of downside risks to the outlook.

Further escalation in trade tensions was noted by 38.9 per cent of respondents as a downside risk.


Compared to the previous survey, about twice as many respondents were concerned about the risks stemming from the deterioration in the labour market, including a rise in unemployment.

The median of forecast for unemployment rose to 3.6 per cent for this year, up from 2.4 per cent in the earlier survey.

The Ministry of Manpower (MOM) data, which was also released yesterday, showed that the number of working people, excluding domestic help, slipped by 25,600 in the three months to March 31 - the biggest quarterly contraction on record.

The unemployment rate for citizens rose to 3.5 per cent, 0.2 percentage points more than the rate for residents, and total unemployment stood at 2.4 per cent, MOM data showed.

Irvin Seah, senior economist at DBS Bank, said the pessimism reflected in the MAS survey emanates from the implementation of the two-month long circuit breaker that ended on June 1 giving way to a phased reopening of the economy.

All the 23 participants in the MAS survey expected lower corporate profitability for both the second quarter and the full year.

Most of the respondents in the survey predicted a decline in private residential property prices in the April-June period on a quarter to quarter basis and more than three quarters believed prices will be lower by the end of 2020.