While a strong short-term growth bounce from the impact of the VODI-19 pandemic is plausible, the longer term recovery is likely to be weak and gradual, said Ravi Menon, Managing Director, Monetary Authority of Singapore (MAS).
Speaking at the first ever virtual media conference for MAS' annual report 2019/2020, Menon noted that the world is in the midst of an economic recession without modern precedent.
"The global economy contracting nearly 14 per cent quarter-on-quarte4 in the first three months of 2020 – almost three times deeper than the sharpest decline seen during the Global Financial Crisis."
The contraction in the second quarter is likely to be even deeper, as economies outside China were most severely affected by the virus and shutdown measures.
The projected recovery will be uneven – across countries, across industries, and across time, said Menon.
In ASEAN, economies are expected to contract by 2.6 per cent. While some ASEAN countries will benefit from the emerging recovery in manufacturing, the collapse in tourism will weigh more on others.
Overall, MAS expects the global economy to grow by 3.5 per cent in the second half of 2020, following an estimated minus 5.5 per cent in the first half.
Meanwhile, the Singapore economy is going through its most severe downturn since independence. "In year-on-year terms, the economy contracted by 6.5 per cent in the first half of 2020, its first decline since the global financial crisis."
Construction, travel-related, and customer-facing domestic services bore the brunt of the COVID-19 containment measures in Singapore.
The trade-related cluster (comprising manufacturing, wholesale trade, and water transport and storage) and the modern services cluster (comprising financial, ICT, and professional services) were less affected.
"All in, the Singapore economy will experience a full-year contraction in 2020, with GDP growth projected at –7 to –4 per cent," Menon said.