SINGAPORE (Reuters): Singapore on Monday cut its 2020 growth and exports forecasts due to an expected economic blow from the new coronavirus outbreak, flagging the chance of a recession this year.
The Southeast Asian city-state has reported 75 cases of the virus to date, one of the highest tallies outside China where it has claimed over 1,700 lives.
The downgrade of its GDP forecast range to -0.5% to 1.5%, from 0.5% to 2.5% previously, opens up the possibility that full-year growth could be negative, with the prime minister saying on Friday that a recession is possible.
“The outlook for the Singapore economy has weakened since the last review... In particular, the COVID-19 outbreak is expected to affect the Singapore economy,” said the ministry’s permanent secretary, Gabriel Lim, referring to the disease’s technical name.
Lim said the impact would be most keenly felt in manufacturing, trade, tourism and transport, alongside retail and food services.
Singapore is set to roll out a hefty package of measures to cushion the blow from the epidemic on its economy at its annual budget on Tuesday, with some analysts expecting it to plan for its biggest deficit in over a decade.
The full-year forecast range for non-oil domestic exports was also lowered on Monday to -0.5% to 1.5%, from 0% to 2% previously.
The revisions came as the city-state revised up slightly its 2019 fourth-quarter growth figures.
Gross domestic product (GDP) rose 1% year-on-year in the fourth quarter, faster than the 0.8% growth in the government’s advance estimate, while it grew 0.6% on the quarter, compared with an initial estimate of a 0.1%.
The economy had been staging a nascent recovery after recording its lowest growth rate in a decade in 2019 at 0.7% before the virus spread to the city-state in late January.
“This would be the last good number we will see at least for the next two quarters,” said Lee Ju Ye, an economist at Maybank.
“We are mindful that there is a risk of a technical recession,” Lee said, adding that such a contraction may prompt central bank easing.
The Monetary Authority of Singapore (MAS) is scheduled to issue its semi-annual policy review in April. MAS deputy managing director, Edward Robinson, said on Monday that its monetary policy position and inflation forecasts remain unchanged.
Singapore’s currency was little moved on Monday’s news.