News: COVID-19 Outbreak: Singapore economy to contract 0.6% in Q1

Feb 26, 2020

A major trade partner with China, the city-state’s economy is expected to contract 0.6% in the first quarter of 2020 – a first since the 2009 recession following the global financial crisis.

Economists expect the effects of the coronavirus outbreak to reverberate beyond China, with Singapore being the worst hit.

A major trade partner with China, the city-state’s economy is expected to contract 0.6% in the first quarter of 2020 – a first since the 2009 recession following the global financial crisis.

Aside from Singapore, forecast from economists polled by Reuters showed that South Korea, Australia, Thailand and Taiwan are also expected to register their worst performance in years in Q1 2020.

South Korea was forecasted to grow 2.1% (down by 0.4% from the January Reuters poll), while Thailand and Taiwan are expected to expand by 0.2% and 1.3% respectively. Australia’s economy is predicted to grind to a halt, ending the near three-decade growth streak that began in 1991.

Meanwhile, Indonesia was expected to see the least impact, with the economy forecasted to grow 4.7% this year.

“The impact of the coronavirus on economies in Asia is potentially huge, as tourism in the region takes a beating. From deserted hotels to empty airports, the impact of this little scrap of protein and lipid on economies in the region is potentially enormous,” said Robert Carnell, Chief Economist and Head of Research for Asia-Pacific at ING in Singapore.

Read: 3 Key Reasons Why The M Condo Was a Success, Despite the Coronavirus Outbreak

“If this doesn’t sound sufficiently scary, bear in mind that tourism is just one of the channels through which the coronavirus can weaken the GDP growth of Asian countries grappling with this epidemic.”

A similar poll published over a week ago found that the Chinese economy will expand at its slowest pace in the present quarter since the financial crisis. In a worst-case scenario, economists anticipate the Chinese economy to grow 3.5% or almost half of the 6% reported in the last quarter of 2019.

“The base case is rapidly shifting from ‘Bad’, meaning only China is impacted, to ‘Ugly’, where both emerging Asia and developed economies see soaring infection rates and deaths,” said Michael Every, Head of Financial Markets Research for Asia-Pacific at Rabobank in Hong Kong.

He noted that the economic impact will “likely resemble the global financial crisis of 2008-2009 more than the SARS outbreak in 2003”.

Nonetheless, most major Asian economies polled are expected to bounce back in the second quarter, albeit growth for this year will likely be lower than forecasted last month, reported Reuters.

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

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