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Business contracts 12.6% over the previous year

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

Suhaimi Abdullah | Getty Images

Singapore’s economy contracted 12.6% yoy in the second quarter, as the Ministry of Trade and Industry released on Tuesday had estimated.

Analysts interviewed by Reuters had expected the Southeast Asian economy to shrink 1

0.5% yoy in the three months ended June 30.

According to the Ministry, the economy in Singapore fell 0.7% in the first quarter.

Economic performance deteriorated in the second quarter due to the implementation of partial locking measures, which the Singapore government called “breakers” to reduce the spread of the corona virus.

These measures, which started in early April, included the closure of most jobs (except for those that offer essential services) and the temporary closure of all schools. The “breaker” lasted almost the entire second quarter, with the Singapore government easing some measures from early June.

The restrictions harm companies dependent on domestic consumption. The country’s retail sales decreased 52.1% yoy in May, the sharpest drop since records began in 1986, Reuters reported.

Meanwhile, the city-state’s trade-oriented sectors have also been impacted by reduced global activity and a flare-up of tensions between the US and China.

Alex Holmes, an Asian economist at Capital Economics, said that business in Singapore has recovered since easing partial closures last month.

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

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

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