Singapore’s closure of bars and entertainment venues to contain the spread of coronavirus is another gut punch to the city-state’s economy already suffering from widespread disruptions to trade and tourism.
Authorities are scrambling to curb the spread of the virus after a recent spike in confirmed virus cases, now at more than 550, mainly from residents returning from overseas trips. For Singapore’s small open economy, the new restrictions will hurt consumer spending and push the nation closer to a recession.
“Tourism demand is already gone. This will rub salt into the wound of the entertainment industry, given that the latest set of measures will erase domestic demand, which has already been weakened due to the outbreak, ” said Irvin Seah, senior economist at DBS Group Holdings Ltd in Singapore.
Although necessary to contain the spread of the virus, “every additional set of restrictive measures will add more pain on the economy”, he said.
The central bank has also brought forward its policy decision to March 30, with analysts expecting it to ease policy. Seah said his team is sticking to a forecast for a 0.5% contraction in GDP this year, while warning of “significant downside risks” to that figure if the outbreak worsens.
The government’s latest projection, published in February, was for growth of around 0.5%, the midpoint of its forecast range. That’s likely to be revised with the release of advance first-quarter growth figures.
GDP probably contracted an annualised 7.2% this quarter, according to the median estimate in a Bloomberg survey of eight economists.
Business groups including the Singapore Hotel Association are calling for more financial assistance to retain workers.