Singapore is bracing for the worst recession in its 55-year history after the coranavirus pandemic knocked its bellwether economy into a sharp contraction in the first quarter, reinforcing fears global activity will tank this year.
Singapore is among the world's most open economies and one of the first to report growth data since the virus spread from China earlier this year, portending more pain for other countries as they impose increasingly strict anti-virus measures.
"This will likely be the worst economic contraction since independence," said finance minister Heng Swee Keat as he unveiled more than $30 billion in new support measures. The city-state's total virus relief measures announced this year now amount to 11 percent of its GDP.
Even though Singapore has so far avoided the lockdowns seen in other nations, its economy still shrank 2.2 percent in the first quarter from a year earlier, with heavy hits to services, construction and manufacturing, preliminary readings from the trade ministry showed.
The small Southeast Asian city-state is a major financial center and port, making it a bellwether for global trade. It is also a popular tourist destination.
The contraction was the biggest since the 2009 financial crisis and was below economists' expectations for a 1.5 percent decline. On a quarterly basis, gross domestic product (GDP) shrank 10.6 percent, the lowest since 2010 and below expectations for a 6.3 percent decline.
The data prompted the trade ministry to cut its 2020 GDP forecast range to -4 percent to -1 percent, from a previous range of -0.5 percent to 1.5 percent.
CANARY IN THE MINESHAFT
More than three-quarters of economists polled by Reuters last week believed the global economy is already in recession as the virus continues to spread, ending the longest expansion on record.
Highlighting the suddenness and severity of the shock, separate data on Thursday showed Singapore's industrial output plunged 22.3 percent in February from the previous month - the biggest contraction in official records going back to 1983, and far more than a forecast 11.5 percent fall.
Aside from the fiscal support, economists are betting on drastic monetary easing from the central bank which has brought forward its semi-annual monetary policy statement to Monday, March 30.
Singapore has been battling the virus outbreak which has killed more than 21,000 people globally since mid-January. It has seen a surge in mainly-imported infections in recent days, prompting it to order the closure of bars, discos, and cinemas and limit gatherings.
On Wednesday, it recorded its biggest daily jump in cases, bringing its total to 631 with two deaths.
"Singapore's growth estimate is like the canary in the mineshaft and warns of further economic pain to come for other Asian economies as well," analysts at OCBC said.