Singapore: GDP contraction seen losing traction in H2 2020 – UOB

Barnabas Gan, Economist at UOB Group, assessed the latest GDP figures in Singapore.

Key Quotes

“Singapore’s 2Q20 GDP contracted 13.2% y/y (-42.9% q/q saar), down from the previous advanced estimates which registered 2Q20 GDP at -12.6% y/y (-41.2% q/q saar). The final GDP print solidifies Singapore’s first technical recession since 1Q09, and the worst contraction on record.”

“The downgrade from the advanced estimates was primarily led by a fall in manufacturing activity, which fell 0.7% in 2Q20, down from advanced estimates of +2.5%.”

“As highlighted in our 2Q20 GDP preview, 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 remain in contraction but at a more moderate pace in the second half of 2020. Still, COVID-19-led concerns, coupled with brewing geopolitical and trade tensions in the background, are key drags to Singapore’s recovery in 2H 2020.”

“Given the protracted COVID-19 situation worldwide amid the persistent downturn in Singapore’s construction and services sector, we downgrade our full-year GDP outlook to -5.0% in 2020, down from -4.0% previously.”