Singapore — Rising mobility implies economic recovery
World Risk Developments July 2020
Singapore—considered a bellwether for the global economy and Australia's largest export market in ASEAN—entered a technical recession in the second quarter. On an annualised basis, the economy shrank by 41% from the previous three months according to advanced estimates, the biggest quarterly contraction on record. The plunge in global trade hit the trade-reliant manufacturing industry while domestic activity was weakened by “Circuit Breaker” lockdown measures implemented from 7 April to 1 June, which included the suspension of nonessential services and closure of most workplaces.
Assuming localised quarantine policies are effective in containing new COVID-19 outbreaks, the dismal second quarter likely marked the low point. Activity has rebounded since the easing of lockdown measures on 19 June (Chart). The government has launched stimulus measures equivalent to approximately 20% of GDP, among the largest in Asia, including direct cash handouts and wage subsidies. But consistent with global prospects, the recovery will be modest and volatile; official forecasts suggest GDP will shrink between 4% and 7% overall this year.
The People’s Action Party (PAP), which has been in power since 1965, was returned at the general election on 10 July. This confirmed the nation’s status as one of the world’s most politically stable. The ruling party has historically engendered support by delivering strong growth—Singapore’s GDP per capita was the fourth highest globally pre-crisis. Amid the COVID-induced economic slump, the PAP’s share of the popular vote slid to 61%, its second-worst result on record.