Singapore’s economy shrank more than 40 percent in the second quarter as the COVID-19 pandemic plunged the Southeast Asian financial hub into a recession for the first time in more than a decade, official data showed yesterday.
The 41.2 percent quarter-on-quarter drop was the worst ever recorded in the city-state.
On an annual basis, the economy contracted 12.6 percent in the first six months of this year, data released by the Singaporean Ministry of Trade and Industry showed.
Photo: EPA-EFE
It marked the second consecutive quarter of contraction, meaning that the city-state has entered a recession for the first time since 2009, when it was battered by the global financial crisis.
Trade-dependent Singapore is one of the first countries to report growth data for the period when many nations entered lockdowns, and offers an ominous warning of the devastation being wrought on the global economy.
The worse-than-expected figures will also ring alarm bells for other Asian economies reliant on trade — Singapore is typically hit first, as ripples spread across the region.
“It’s the worst-ever quarterly figure in Singapore’s 55-year history,” CIMB Private Banking regional economist Song Seng Wun (宋城煥) said. “But it’s not a surprise, as the bottom line is that Singapore is a small city-state, extremely dependent on trade in goods and services.”
The trade ministry said that the huge contraction was because of restrictions imposed from early April to early June to stem the spread of COVID-19, which included the closure of many businesses. It also attributed the shrinkage to weak external demand, as other countries imposed strict lockdown measures.
The figures showed that the construction sector shrank 54.7 percent year-on-year and 95.6 percent from the previous quarter and services, including tourism-related businesses and air transport, fell 13.6 percent year-on-year, but manufacturing expanded 2.5 percent from the same period a year earlier, mostly because of an output increase in the biomedical sector.
Yesterday’s data are based on so-called “advance estimates” and the figures are often revised once the full quarter’s results are available.
Singapore initially kept the virus in check through a strict regime of testing and contact-tracing, only for serious outbreaks to later sweep through crowded dormitories housing low-paid migrant workers.
The long-ruling People’s Action Party saw its support slip in a general election on Friday last week, although it still comfortably retained power, with voters concerned about job security and the economy during the pandemic.
The affluent country’s government has announced about S$100 billion (US$71.72 billion) in stimulus packages, but the poor data could pile pressure on leaders to do more.
“Given that jobs featured highly during the recent election campaign, some of the budget measures targeting jobs may potentially be extended if the domestic labor market continues to soften,” OCBC Bank (華僑銀行) research and strategy head Selena Ling (林秀心) said.
Taiwan’s technology protection rules prohibits Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) from producing 2-nanometer chips abroad, so the company must keep its most cutting-edge technology at home, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. Kuo made the remarks in response to concerns that TSMC might be forced to produce advanced 2-nanometer chips at its fabs in Arizona ahead of schedule after former US president Donald Trump was re-elected as the next US president on Tuesday. “Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently,” Kuo said at a meeting of the legislature’s
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS