Business & Economy

Singapore hits recession as economy slumps in Q2

Bangkok Desk, Jul 14 (efe-epa).- Singapore has entered a technical recession as its economy contracted 41.2 percent in the second quarter from the previous three months amid “circuit breaker” measures to contain the novel coronavirus and weak external demand, government data showed Tuesday.

“On a quarter-on-quarter seasonally-adjusted annualized basis, the economy shrank by 41.2 per cent in the second quarter,” the Ministry of Trade and Industry said in a statement.

During the second quarter of the year, between April and June, the Asian country’s economy contracted by 12.6 percent year-on-year, according to figures released by the ministry, following a first quarter contraction of 0.7 percent.

This was “due to the Circuit Breaker (CB) measures that were implemented from 7 April to 1 June to slow the spread of COVID-19, which included the suspension of nonessential services and closure of most workplace premises, as well as weak external demand amidst a global economic downturn precipitated by the COVID-19 pandemic,” the ministry said.

The construction sector contracted by 54.7 percent on a year-on-year basis in the second quarter, “a significant deterioration from the 1.1 percent decline in the previous quarter.”

“On a quarter-on-quarter seasonally-adjusted annualized basis, the construction sector shrank by 95.6 percent in the second quarter, far worse than the 12.2 percent contraction in the preceding quarter,” the ministry said.

Services producing industries contracted by 13.6 percent year-on-year in the second quarter, compared to the 2.4 percent decline in the previous quarter.

The ministry said tourism-related sectors such as accommodation and air transport were “severely affected by global and domestic travel restrictions,” while outward-oriented services sectors such as wholesale trade and water transport were “adversely affected by a fall in external demand” during the pandemic.

Meanwhile, “domestically oriented services sectors such as food services, retail and business services were significantly affected” by the circuit breaker measures.

“On a quarter-on-quarter seasonally adjusted annualized basis, the services producing industries shrank by 37.7 per cent in the second quarter, extending the 13.4 per cent decline recorded in the preceding quarter,” the ministry said.

Singapore, which expects its economy to shrink between 4 to 7 percent this year, enters a technical recession for the first time since the second quarter of 2009.

Last weekend, the city-state held early elections with the aim of having a stable government to address the country’s economic recovery. The winner was the People’s Action Party, which has been in power since independence in 1965. EFE-EPA


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