S'pore economy predicted to shrink 6% in 2020

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Belmont Lay | September 07, 2020, 04:24 PM

The Singapore economy is predicted to shrink 6 per cent in 2020.

The forecast was made by 26 private-sector economists and analysts polled by the Monetary Authority of Singapore (MAS) following a worse-than-expected slump in the second quarter.

Their earlier forecast was a 5.8 per cent decline.

The 11.8 per cent year-on-year decline predicted in the April to June quarter turned out to be a 13.2 per cent plunge.

The latest quarterly survey was released on Monday, Sept. 7.

Assuming economy has gone through worst phase

The second quarter GDP was Singapore’s worst-ever quarterly performance.

But that could be the worst contraction for the economy, assuming it has bottomed out.

Those surveyed by the MAS expect a smaller contraction of 7.6 per cent in the third quarter.

Some industries to still fare poorly

But forecasts for other indicators were gloomier.

The construction sector is expected to contract 23 per cent.

Accommodation and food services is expected to contract 29.1 per cent for the full year.

Private consumption expected to fall 11.8 per cent this year.

The survey is predicting unemployment rate to be 3.5 per cent by the year-end.

Foreseeable risks

The greatest downside risk to the economy is a further deterioration in the current Covid-19 outbreak, respondents felt.

The top upside risks will be a containment of Covid-19, possibly due to a successful global deployment of a vaccine, and a stronger-than-expected manufacturing sector performance led by electronics and pharmaceuticals production.

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