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Singapore’s economy contracts 12.6% year over year in the second quarter

A general view of the Marina Bay Sands, the ArtScience Museum, the Singapore Flyer and the central business district on June 19, 2020 in Singapore.

Suhaimi Abdullah | Getty Images

Singapore’s economy contracted by 12.6% in the second quarter compared to a year ago, according to advance estimates by the Ministry of Trade and Industry released Tuesday.

Analysts polled by Reuters had expected the Southeast Asian economy to shrink by 10.5% year-over-year in the three months ended June 30. 

In the first quarter, the Singapore economy registered a 0.7% contraction, according to the ministry.  

The economic performance in the second quarter worsened due to the implementation of partial lockdown measures — which the Singapore government called a “circuit breaker” — aimed at reducing the spread of the coronavirus.

Those measures, which started in early April, involved shutting most workplaces (except those offering essential services) and closing all schools temporarily. The “circuit breaker” lasted nearly the entire second quarter, with the Singapore government easing some measures starting in early June.  

The restrictions hurt businesses dependent on domestic consumption. The country’s retail sales plunged 52.1% in May compared to a year ago — the steepest drop since records began in 1986, reported Reuters.

Meanwhile, the city state’s trade-oriented sectors have also been weighed down by reduced global activity and a flare up in U.S.-China tensions. 

But Alex Holmes, Asia economist at consultancy Capital Economics, said activity in Singapore has rebounded since the easing of partial lockdown measures last month. 

“While many industries, notably tourism and hospitality, will continue to suffer, the economy should rebound faster than others in the region,” he wrote in a note last week that previewed Singapore’s second quarter economic performance.

“The key reason for optimism is the record size of the government’s stimulus package, which is equivalent to around 20% of GDP,” he added.

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