Singapore said it was bracing for what could be its deepest-ever recession, while European data showed tumbling business and consumer confidence, as evidence mounted that the financial impact of the coronavirus pandemic was getting worse.
Singapore, a Southeast Asian country of 5.7 million, is among the fastest to report official growth statistics. Its open, trade-dependent economy makes it something of a bellwether of global economic health. And it was also among the first nations outside China to be affected by the novel coronavirus.
Singapore’s economy shrank 10.6% in the first three months of this year, advance estimates showed on Thursday. The figure is annualized, is adjusted for seasonal differences and compares activity to the previous quarter.
The government slashed full-year forecasts to a contraction of between 1% and 4%, down from a growth range of between negative 0.5% and 1.5%. That downturn could surpass 1998, when the economy shrunk 2.2%, the worst year since it became an independent republic in 1965.
“We are heading towards uncharted territory now,” DBS economist Irvin Seah said. He said previous slowdowns were due to sharp falls in demand, exacerbated by poor consumer and investor confidence. But this time, economic activity was also being directly disrupted by strict measures imposed by many countries to curb the spread of the coronavirus.
Selena Ling, head of treasury research and strategy at OCBC Bank in Singapore, said the three key sectors of manufacturing, services and construction had all shrunk in the first quarter, while the economy was facing both demand- and supply-side challenges. “All engines of growth have stalled,” she said, adding that the first quarter would probably not mark the low point.
Neighboring countries are also struggling. In nearby Thailand, the central bank on Wednesday slashed its full-year forecasts to a 5.3% contraction in gross domestic product, down from the 2.8% growth it predicted in December. It cited challenges in tourism, exports, supply chains and slowdowns in trading partners.
Meanwhile in Europe, French data on Thursday showed business confidence was at its weakest point since 1989 when records began, while a survey by market research firm GfK showed German consumers had become more downbeat. The Netherlands and Ireland were advised by economic research institutes to expect declines in output this year in excess of 7%.
The latest figures add to the already gloomy picture painted by surveys earlier this week, showing the U.S. and Europe saw record declines in business activity in March.
Singapore reported its first confirmed case of the novel coronavirus on Jan. 23. In the past week, infections in the city-state have jumped to more than 630, with new cases mostly due to citizens and residents returning from the U.K., the U.S. and neighboring countries.
The government has banned short-term visitors and required all returning residents to stay home for 14 days or face prosecution. It has also canceled all events and mass gatherings, while bars, clubs, cinemas and all other entertainment outlets will be closed from just before midnight Thursday until April 30.
Globally, there were more than 472,000 cases of the novel coronavirus as of Thursday, with a death toll surpassing 21,300, spread across 175 countries and regions, according to data from Johns Hopkins University.
To support the economy, the Singapore government on Thursday laid out a second stimulus package of $33.2 billion, on top of a $4.42 billion plan unveiled in February.
Singapore President Halimah Yacob warned the downturn could last longer than the slowdown caused by Severe Acute Respiratory Syndrome in 2003 or the global financial crisis in 2009. She gave her support in principle for tapping into the country’s reserves.
“The situation we are heading into looks more like a thunderstorm than a drizzle,” the president said in Parliament on Thursday.
Write to Chong Koh Ping at firstname.lastname@example.org
Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8