Singapore warns of worst economic contraction since independence

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Singapore: SingaporeThe virus-infested economy could shrink by seven percent this year – the worst reading since independence – the government said on Tuesday, as it revealed a new multi-billion dollar stimulus package.
The city-state is seen as the bell of the global economy, and the forecast exposes the extreme pain inflicted on countries with historical contraction killer disease.
The Deputy Prime Minister of Singapore unveiled a new $ 33 billion ($ 23.2 billion) support package for the troubled city, which remained closed for several months worldwide.
The trade ministry’s forecast – which was a drop from the projected maximum four percent contraction in March – showed the economy declined 0.7 percent in the first three months of the year, according to official figures, while it was down 4.7 percent from the previous quarter.
The financial hub is one of the most open economies in the world, and is usually the hardest and earliest hit during any global shock.
The ministry said the new estimate was imposed “in view of the decline in the external demand outlook” and partly due to the lockdown. A seven percent contraction would be the worst since the city’s independence in 1965.
Demand for exports has decreased in major markets such as the United States, Europe and China, and stagnation in international air travel has affected Singapore’s major tourism sector.
Singapore has ordered the closure of most businesses, advised people to stay home, and banned large celebrations. While officials say they can start relaxing the rules from early June, many restrictions will remain in force.
Deputy Prime Minister Heng Swee Kate, who is also the Finance Minister, announced the new package in Parliament, whose main objective is to help companies save jobs.
The government has so far calculated Sg $ 90 billion, or more than 20 percent of GDP, to offset the economic decline from the virus, which has infected more than 32,000 people in the city-state, the most in Southeast Asia. is more.
“It has been an unprecedented crisis that is still rapidly changing,” Heng said, adding that Singapore “has the financial resources to mount this response”.
Song Seng Woon, an economist at CIMB Private Banking, said he expected the full fall to fall in the second quarter to 15-20 percent of GDP.
“Singapore is a small and open economy whose trade is three times the size of GDP. The sharp contraction is a reflection of its external vulnerability,” he told AFP.
The Ministry of Trade also said that “significant uncertainty” persists despite the opening of some economies as they emerge from gradual lockdown.
“First, there is a risk that subsequent waves of transition in major economies such as the US and the Eurozone may further disrupt economic activity,” he said.
“Second, the declining fiscal and monetary policy perception in many major economies may damage confidence in the ability of authorities to react to shocks.”
The Ministry of Trade warned that “despite the recession, the length and severity of the Kovid-19 outbreak, as well as a significant degree of uncertainty continue on the path to economic recovery”.
In March, Singapore’s central bank eased monetary policy to support a virus-affected economy.

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