SINGAPORE (THE BUSINESS TIMES) – Singapore’s economy may contract 0.8 per cent this year from the impact of the coronavirus pandemic after growing 0.7 per cent in 2019, said S&P Global Ratings on Monday (March 23).
The credit ratings agency is also expecting economic contraction in Hong Kong, South Korea, as well as a newly deflationary Japan. In addition, China’s gross domestic product (GDP) growth rate is expected to slow to 2.9 per cent in 2020.
It forecasts the coronavirus pandemic will cost an estimated US$620 billion (S$901 billion) in total and permanent income loss for Asia-Pacific economies.
The loss will be distributed across sovereign, bank, corporate and household balance sheets.
The region’s average growth rate will be 2.7 per cent, the agency said in a downward revision to its Asia-Pacific economic forecasts on Monday (March 23).
DBS Bank last week slashed its forecast for the Singapore GDP. It now sees the economy shrinking by 0.5 per cent this year, instead of the 0.9 per cent growth it forecast last month. This downgraded forecast still comes with significant downside risks should the coronavirus outbreak worsen further
“We believe measures to contain Covid-19 have pushed the global economy into recession and could cause a surge of defaults among non-financial corporate borrowers,” the S&P report noted.
The revised forecasts are based on government authorities estimating the pandemic to peak in June or August 2020. S&P had revised its real GDP, inflation policy rate and unemployment rate forecasts in its latest update.