The second quarter Gross Domestic Product (GDP) of Singapore has shrunk by 12.6% and the overall drop has totaled to 41.2%.
Last May, Singapore’s Ministry of Trade and Industry (MTI) projected the GDP growth forecast for 2020 to be around -7% to -4%. The latest gross domestic product estimated by economists polled by Reuters was also worse than expected.
Their last poll suggested that the economy of Singapore would drop by 37.4% quarter-over-quarter.
BREAKING: Singapore slumps into recession with 41.2% fall in quarterly GDP https://t.co/yF3YcMWAIz
— Bloomberg (@business) July 14, 2020
A closer look at Singapore’s GDP
Jeroen Blokland, a fund manager at Robeco Asset Management gave its followers a glimpse of what transpired in Singapore’s second-quarter GDP reported by the Ministry of Trade and Industry (MTI).
— jeroen blokland (@jsblokland) July 14, 2020
Based on the chart, manufacturing only expanded by 2.5% this quarter compared to last quarter’s 8.2%. While services-producing industries contracted by 13.6% compared to the same period last year.
But, what battered the GDP of Singapore the most was its construction sector plunging 54.7% compared to a year ago.
Crunching the overall numbers from Singapore’s GDP, it’s manufacturing and construction sector has plunged by 23.1% and 95.6%, respectively.
Economic performance worsened due to lockdowns
Last March, Singapore developed its own contact tracing app called TraceTogether in hopes of speeding up the tracking of coronavirus cases.
Later on, Apple and Google released their app for contact tracing but Singapore announced that they will not be using the app due to limitations.
Since April, the government also tried its best to curb the coronavirus by implementing measures such as suspending schools and most workplaces.
Despite the efforts in lockdowns, their COVID-19 cases have also spiked now reaching over 46,200 confirmed cases, as per Johns Hopkins University.
However, Alex Holmes, Asia economist at consultancy Capital Economics, said that activity in Singapore has bounced back since the easing of partial lockdown measures last month, per CNBC.
Other factors may have also added to the downfall
Aside from the closing of businesses that are causing economic slumps, other countries are also getting more cautious when it comes to cyberspace.
Last month, a cybersecurity firm just warned a new group of China-based hackers that are targeting countries in the Asia Pacific region. Another recent development would be the removal of Huawei’s involvement in U.K. 5G networks.
In addition, a report released by the Singapore Cyber Landscape (SCL) suggested that cyber threats have also increased.
This GDP drop from Singapore may have shaken the Asia Pacific markets today despite China reporting positive year-on-year trade data with imports and exports rising at 6.2% and 4.3%, respectively.
Only time will tell if Singapore will be able to recover from this economic onslaught until a coronavirus cure is developed.