News: Singapore’s Q2 GDP won't be as grim with the inclusion of June's reopening: economists

Jul 15, 2020

“Given that Phase 1 began in early June and Phase 2 started sooner than we thought on 19 June, this allowed businesses to reopen and it means that the June indicators, such as retail sales, will not be as bad as April and May”, said Jeff Ng, Senior Treasury Strategist at HL Bank. 

Economists expect Singapore’s gross domestic product (GDP) for the second quarter of 2020 to be less grim once the full data for the quarter is taken into account, reported Channel News Asia (CNA).

This comes as the circuit breaker measures to contain the spread of COVID-19 was only lifted in June.

“Given that Phase 1 began in early June and Phase 2 started sooner than we thought on 19 June, this allowed businesses to reopen and it means that the June indicators, such as retail sales, will not be as bad as April and May,” CNA quoted Jeff Ng, Senior Treasury Strategist at HL Bank, as saying.

“There are some chances that there will be an upward revision in the second quarter GDP number by a few percentage points,” he said.

Based on the Ministry of Trade and Industry’s (MTI) advance estimates, Singapore’s GDP fell 41.2% in Q2 from the past three months. On a yearly basis, the economy contracted 12.6%.

The ministry attributed the drop in GDP to the enforcement of circuit breaker measures from 7 April to 1 June and the weak external demand amid a global downturn.

Noting that the advance estimates were based on April and May data, when around 75% of enterprises were unable to function properly, Irvin Seah, Senior Economist at DBS, expects the year-on-year GDP to slightly increase by “at least two percentage points” when the June numbers come in.

Economists also believe that the economy may have bottomed out. However, it depends on various conditions like the absence of a second wave of COVID-19 infections that may trigger the imposition of another circuit breaker locally and further slowdown in the global economy.

“Looking ahead, the second quarter will mark the trough,” CNA quoted Alex Holmes from research firm Capital Economics as saying.

Recommended article: Why More Homeowners Are Refinancing Now, Especially Thanks To COVID-19 Property Reliefs

“The high-frequency data that we track show that domestic activity started to rebound once restrictions on work and leisure began to be eased at the start of June.”

Selena Ling, Head of Treasury Research and Strategy at OCBC, said the worst may be over, despite confirmation that Singapore has entered a recession.

In fact, she expects to see “some stabilisation” in the third quarter.

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Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email victorkang@propertyguru.com.sg

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