Singapore: GDP expected to have contracted further in Q2 – UOB

Economist at UOB Group Barnabas Gan gives his views on the upcoming GDP figures in Singapore for the April-June period.

Key Quotes

“Singapore’s 2Q20 GDP growth is scheduled to be released on 14th July 2020. Accounting for the incoming high-frequency data to-date, we forecast Singapore to clock -10.5% y/y (-34.6% q/q saar) in 2Q20. This will also mark the first technical recession since 1Q09.”

“We believe that the contraction in GDP will trough in 2Q20, given the Circuit Breaker and Phase One restrictions in this period. Thereafter, we expect GDP to contract but at a more moderate pace of -3.7% y/y and -1.2% y/y in the third and fourth quarters respectively.”

“COVID-19-led concerns, coupled with brewing geopolitical and trade tensions in the background, are key drags to Singapore’s growth potential in 2020. Singapore’s output gap to-date remains in negative territory, suggesting that the economy is still growing below potential.”

“We still expect the Singapore economy to contract by an average of 4.0% for the whole of 2020 with downside risks, marking the deepest recession since Singapore’s independence. Our forecast is also at the top-bound of MTI’s revised GDP growth range outlook of between -4.0% and -7.0% for this year.”