Citigroup: Singapore to witness deeper recession in 2020

Singapore (VNA) – Singapore will fall into a deeper recession this year after it continues extending and tightening social distancing measures to prevent the COVID-19 until June 1, Citigroup warned.

Citigroup’s economists Wei Zheng Kit and Kai Wei Ang said that the city’s economy will contract by 8.5 percent in 2020, down from an earlier estimate of a 6 percent fall.

The circuit breaker will cause close to 25 percent to 30 percent of gross domestic product (GDP) to come to a standstill, with every month of extension further reducing 2020 GDP by 2 percent to 2.5 percent.

The technical rebound after the lifting of the circuit breaker on June 1 will be capped by continued social distancing and only gradual recovery in exports, they wrote.

Any further cut to GDP forecasts for this year or next raises the odds that the Monetary Authority of Singapore will again ease policy by lowering the currency's trading range at its October meeting, the economists wrote.

The central bank, which uses the exchange rate as its main policy tool, took unprecedented easing steps last month by allowing for a weaker exchange rate to support the export-reliant economy.

Singapore now has the most cases in Southeast Asia as COVID-19 spreads quickly in dormitories housing foreign workers. As of noon on April 22, the country confirmed over 10,000 infections./.