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SINGAPORE – Singapore will sink into a deeper recession than earlier forecast this year amid the deterioration in global demand from the coronavirus pandemic as well as the expected impact of circuit breaker measures at home.
The economy will shrink by 7 to 4 per cent, worse than the 4 to 1 per cent contraction earlier predicted, said the Ministry of Trade and Industry (MTI) on Tuesday (May 26).
MTI said that there were significant uncertainties in the global economy, with a risk that subsequent waves of infections in major economies such as the United States and Eurozone could further disrupt economic activity. In particular, if infections start to rise and strict measures such as lockdowns and movement restrictions are reimposed, the downturn in these economies could be more severe and prolonged than expected.
Also, a growing perception of diminished ability to use fiscal and monetary stimulus in many major economies could damage confidence in authorities’ ability to respond to shocks, undermining risk appetite and driving further financial market volatility, with negative spillovers for the broader global economy, it said.
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