SINGAPORE (AFP) – Singapore plunged into recession in the second quarter as the economy contracted more than 40 percent, preliminary data showed Tuesday, with the trade-dependent city state hammered by the coronavirus in another ominous sign for the global recovery.
The economy shrank 41.2 percent quarter-on-quarter and 12.6 percent on-year between April and June, according to data from the trade ministry, and analysts said it was the worst quarterly figure for gross domestic product ever recorded in Singapore.
It marked the second consecutive quarter of contraction, meaning the city state has entered a recession for the first time since 2009, when it was hard hit during the global financial crisis.
Singapore is one of the world’s most open economies and is seen as a barometer for the health of global trade, and the dismal figures are another warning sign that the global economy is heading for a deep and painful downturn.
The worse-than-expected figures will also ring alarm bells for Asia’s many trade-dependent economies — typically, Singapore is hit first before ripples spread across the region.
”It’s the worst-ever quarterly figure in Singapore’s 55-year history,” CIMB Private Banking regional economist Song Seng Wun told AFP.
”But it’s not a surprise as the bottom line is that Singapore is a small city state, extremely dependent on trade in goods and services.”
The trade ministry said the massive contraction was due to restrictions imposed from early April to early June to stem the spread of the virus, which included the closure of many businesses.
It also attributed the shrinkage to weak external demand.
The construction sector contracted by 54.7 percent year-on-year and 95.6 percent compared to the previous quarter, the figures showed.
The services sector shrank 13.6 percent year-on-year, with tourism-related services and the air transport sector hard hit due to travel restrictions.
The manufacturing sector, however, expanded by 2.5 percent on-year in the second quarter, primarily due to a surge in output in biomedical manufacturing, the ministry said. gion.”