JAKARTA — In the latest warning that coronavirus could stall economic growth across Asia, Singapore Prime Minister Lee Hsien Loong said on Friday that the city-state “could take a hit” with recession “possible” this year.
Speaking during a visit to Singapore’s Changi Airport, Lee said the economic impact of the disease known as Covid-19 will likely top that of the Severe Acute Respiratory Syndrome (SARS).
In 2003, the outbreak resulted in reduced commerce and travel across Asia and saw Singapore’s wealthy, trade-based economy shrink by 0.3 per cent during the second quarter.
Lee warned on Friday that although Singapore was free of SARS within four months, the timetable for coronavirus “may not be so fast.”
The coronavirus death toll, now almost 1,400, overtook that of SARS on February 9 and global infections now top 64,000.
Singapore’s total infections jumped from 9 on Friday to 67, the Health Ministry announced.
Lee predicted coronavirus will have a greater impact than SARS because the region’s economies are much more interlinked and because “China, particularly, is a much bigger factor in the region.”
China accounted for 17 per cent of Singapore’s exports and 19 per cent of visitors in 2019, more than double the numbers during the SARS crisis, when China’s gross domestic product was roughly one-eighth its current size.
In response to the outbreak, Beijing banned tour groups – which form half of its annual tourist flow – from leaving the country. Dozens of countries imposed restrictions on Chinese visitors, with Singapore on January 31 temporarily banning all visitors from China.
Singapore’s economy was slowing before the outbreak, with GDP growth dropping from 3.1 per cent in 2018 to 0.7 per cent in 2019, amid disruptions to electronics exports caused by the China-US trade war.
Singapore’s Finance Minister Heng Swee Keat will announce the city-state’s 2020 budget on April 18, with measures expected to counter the impact of reduced trade with and tourism from China. The Finance Ministry has pledged “targeted support to the sectors that have been more directly affected”.
Many throughout the region fear economic fallout, with Malaysia preparing a stimulus package to address the impact of the virus and the trade war.
Though Malaysian Prime Minister Mahathir Mohamad predicted on Tuesday that his country’s economy could grow by 4.8 per cent in 2020, official figures published the following day showed GDP growth dropping from 4.4 per cent to 3.6 per cent year-on-year for the final three months of 2019. It was the country’s weakest quarter of growth since the global financial crisis a decade ago and a drop that came before the virus outbreak.
Countries across south-east Asia are “very vulnerable to the negative economic shock from the collapse in Chinese tourism visits and the expected slowdown in new orders from China,” said Rajiv Biswas, Asia-Pacifc Chief Economist at IHS Markit, a London-based information firm.
Of Singapore’s neighbours, Thailand faces the greatest risk of technical recession due to its “heavy dependence on China for its exports and tourism market,” according to Chua Hak Bin, Senior Economist with Maybank Kim Eng, part of Malaysian bank Maybank.Show