Singapore cuts 2020 GDP forecast to 1.5% as virus poses recession risk

On Monday, Singapore revised down its 2020 growth and exports forecasts on account of the economic fallout from the China coronavirus outbreak, suggesting recession risks in the economy, per Reuters.

Key Points:

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.

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.

Gabriel Lim, Permanent Secretary of the Ministry of Trade and Industry, said: “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.” 

The impact would be most keenly felt in manufacturing, trade, tourism and transport, alongside retail and food services, Lim added.

Despite the growth downgrade, the Monetary Authority of Singapore (MAS) said that there is no change to the monetary policy or inflation forecasts.

On Friday. Singapore’s PM Lee Hsien Loong said that the economy could enter recession due to the blow from the coronavirus outbreak.

Meanwhile, the Singapore dollar (SGD) is seen easing from daily highs of 1.3893 vs. its American counterpart, as USD/SGD now trades at 1.3900, down 0.10% on the day. The SGD jumped to fresh highs, despite the growth forecasts downgrade, as a big beat in January’s exports data pleased the buyers.