Singapore warns of worst economic contractions since independence

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A general view shows the financial business district in Singapore on 26 May 2020

Singapore’s embattled economy could shrink by as much as seven percent this year, which would be the worst reading since independence, with the government saying Tuesday the coronavirus pandemic had throttled the key export sector, AFP reports.

The city-state is seen as a bellwether of the global economy and the historic contraction highlights the extreme pain being wrought on countries by the killer disease.

The warning also came hours before Singapore’s deputy prime minister is expected to unveil another stimulus package for the troubled city, which has been crippled by months of lockdowns around the world.

The trade ministry’s forecast – which was a downgrade from the 4% contraction predicted in March – came as official data showed the economy shrank 0.7% on-year in the first three months of the year, while it reduced 4.7% from the previous quarter.

The financial hub is one of the world’s most open economies, and is usually hit hardest and earliest during any global shock.

The ministry said the new estimate was made “in view of the deterioration in the external demand outlook” and the partial lockdown imposed domestically. A contraction of seven percent would be the worst since the city’s independence in 1965.