Update: Singapore’s economic outlook for 2020

  • Singapore’s economic outlook for 2020Singapore’s economic outlook for 2020
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The Singapore government has launched the third round of fiscal support measures dubbed the Solidarity Budget to shore up struggling businesses, save jobs and support households to weather the coronavirus (Covid-19) outbreak with circuit breaker measures taking effect from 7 April to 4 May 2020.

It will inject a further S$5.1 billion to augment the earlier Unity and Resilience budgets raising the total outlay to date to S$59.9 billion (12% of GDP) to counter the negative fallout on the economy from Covid-19 on domestic consumption, industrial output and trade.

The official GDP forecast range has been lowered to -4.0% to -1.0% from -0.5% to +1.5% earlier. We have since also downgraded our full-year GDP growth outlook to minus 2.5% for 2020 as four key areas will affect economic fundamentals in the wake of the circuit breaker measures:

  • Unemployment outlook: We expect a further rise to 3.5% in 2020, up from 2.3% in 4Q19. That is despite the enhanced Jobs Support Scheme (JSS) under the Solidarity Budget which raises wage subsidies to 75% for all local employees (for the first S$4,600) for the month of April. This may be insufficient to deter layoffs if current measures are extended and economic headwinds persist.
  • Manufacturing: We may see further effects with industrial output already down 1.1% year-on-year (y/y) in February with the Purchasing Managers' Index (PMI) at 45.4, its lowest since February 2009. We will need more clarity in subsequent monthly data releases before we revise our forecast.
  • Trade: While the circuit breaker measures allow firms deemed critical to local and global supply chains to operate, the domino effect of disruptions to global supply chains and demand shocks due to the COVID-19 outbreaks across the globe will take its toll. We expect non-oil domestic exports (NODX) to weigh in at negative 5.0% in 2020 due to the headwinds from the external environment.
  • Domestic consumption: Retail sales have been hard hit and were down 8.6% y/y in February. The enhanced safe distancing rules and closure of retail and non-essential outlets leave consumers with little avenues to spend on domestic goods and services. While online sales will pick up, it leads to ‘retail leakage’ when consumers spend money outside their local market. The current travel restrictions have also dent tourism spending.


We are keeping our GDP growth and inflation outlook at -2.5% and -0.3% respectively for 2020. We see further downside risks to Singapore’s growth and think that the unemployment rate could rise beyond our projected 3.5% in the wake of the circuit breaker measures.

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