Singapore enters recession after GDP contracts 12.6% in Q2
On a quarter-on-quarter seasonally-adjusted annualised basis, the economy shrank 41.2% in Q2 2020.
Singapore has entered into recession after its economy contracted 12.6% on a year-on-year basis in the second quarter of 2020, due to the implementation of the circuit breaker measures from 7 April to 1 June to curb the spread of COVID-19, showed advance estimates from the Ministry of Trade and Industry (MTI) on Tuesday (14 July).
On a quarter-on-quarter seasonally-adjusted annualised basis, the economy shrank 41.2% in Q2 2020.
The construction sector was the worst hit, contracting 54.7% on a year-on-year basis in Q2 2020, which is a significant deterioration from the previous quarter’s 1.1% decline. On a quarterly basis, the sector shrank 95.6% in Q2, far worse than Q1’s 12.2% contraction.
MTI said construction output weakened due to the circuit breaker measures “which led to a stoppage of most construction activities during the period, as well as manpower disruptions arising from additional measures to curb the spread of COVID-19, including movement restrictions at foreign worker dormitories”.
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The services producing industries contracted 13.6% year-on-year, which is also steeper than the 2.4% drop registered in the previous quarter. On a quarterly basis, the sector shrank 37.7%, continuing the 13.4% decline posted in Q1.
According to the ministry, the decline comes as tourism-related sectors such as accommodation and the air transport sector were severely hit by domestic and global travel restrictions, while outward-oriented services sectors like water transport and wholesale trade were adversely affected by a drop in external demand.
The circuit breaker measures had also significantly affected domestically-oriented services sectors like food services, retail and business services.
Meanwhile, the manufacturing sector emerged as the only one to register growth, up 2.5% year-on-year in Q2, albeit slower than the previous quarter’s 8.2% growth.
MTI attributed the growth in the sector to a surge in output within the biomedical manufacturing cluster.
“On the other hand, weak external demand and workplace disruptions during the circuit breaker period weighed on output in the chemicals, transport engineering and general manufacturing clusters,” it said.
On a quarterly basis, the manufacturing sector shrank 23.1%, a sharp reversal from the previous quarter’s 45.5% expansion.
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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg
