Singapore got the money machine flowing but didn’t manage to overcome the pandemic’s effects.
Technical Recession: two consecutive quarters of negative economic growth.
The beginning of the week started with economic news from Singapore. For this year's second quarter, the government announced that the GDP shrank by 12.6%, compared to the same time last year. From the point of view of economists, it is "the steepest drop on record.”
In other words, Singapore entered a technical recession after the GDP shrank by 41.2% in the past three months, compared to the first three of 2020. After the first three months, the GDP fell only by 0.3% on a year-on-year basis. In the second quarter of 2020, the manufacturing expanded by 2.5%, while service-producing industries fell by 13.6%. The construction sector posted the biggest drop – 54.7%.
According to World Bank data, the value of Singapore's imports and exports is four times its GDP, which places it on the fourth-most traded dependent economy.
Specialists believe this happened due to the government's measures to reduce the spread of COVID-19. The measures implemented in April were in force throughout the entire quarter and started to ease in June.
The government expects a contraction of 4% to 7% for the whole year, which could be the most significant in Singapore’s history. The city-state could be in line with an economy rebound because of the size of the stimulus package adopted, which accounts for 20% of GDP ($70.4 billion). Economists are expecting a 10% recovery in 2021.
Sources: cnbc.com, aljazeera.com
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