The Ministry of Trade and Industry said on Aug. 11 that the economy has shrunk by 13.2 per cent year-on-year in the second quarter of 2020, from April to June.

Previous projection: 12.6% contraction in Q2 2020

This is worse than the earlier projection of 12.6 per cent contraction and is the worst that Singapore has experienced in history.

GDP for 2020 adjusted

MTI has also adjusted its prediction on the gross domestic product (GDP) in 2020 from between -4 and -7 per cent to between -5 and -7 per cent.

This is due to a steep decline in GDP in the second quarter due to weakened external demands, as well as global economic downturn, which further stresses the financial system.

There continues to be significant uncertainties in the upcoming quarters, MTI said.

For example, countries can re-impose lockdowns or restriction measures again if the Covid-19 outbreak takes a turn for the worse again.

Adding on to that, Singapore's economy will also be affected by geopolitical tensions and increased protectionism.

Outward-oriented sectors affected

MTI said that the subdued external economic environment will continue to pose a drag on Singapore’s outward-oriented sectors, such as transportation and storage, and wholesale trade.

The reopening of international borders is likely to happen more gradually than expected and this will likely weigh on the outlook of sectors reliant on tourism and air travel, such as accommodation and events organisers.

The downturn in the construction and marine and offshore engineering sectors is projected to be deeper and more protracted than previously anticipated as well.

This will impact firms in supporting industries, such as architectural and engineering companies.

On a more positive note, MTI also highlighted that electronics and precision engineering clusters have improved.

The demand for semiconductors and semiconductor equipment is stronger than expected, CNA reported.

MTI added that a few sectors are expected to expand in 2020, such as biomedical manufacturing cluster, finance and insurance, and information and communications.

Top photo by Andrew Koay