Singapore's economy will shrink in the first quarter amid the coronavirus outbreak. The first three months of this year will see the economy contracting by 0.8 per cent, said a quarterly survey of 21 economists and analysts polled by the Monetary Authority of Singapore (MAS).
The anaemic start will leave gross domestic product (GDP) growing at 0.6 per cent this year, trailing last year's growth of 0.7 per cent.
The Government has already downgraded its own forecast of GDP growth. The estimate was cut by a full percentage point last month to a range of minus 0.5 per cent to 1.5 per cent. The lower end of the range raised the spectre of the first full-year recession for Singapore in about two decades.
An escalation in the Covid-19 outbreak was cited in the MAS survey as the biggest downside risk to the forecasts. The outbreak, which started late last year in China, has since spread across the globe.
The spike in infections in places such as Europe and the United States has spooked markets worldwide and increased talk of a global recession.
The estimates in the MAS survey, which was sent out to respondents on Feb 18, may not have accounted for the impact of the most recent worldwide surge in infections and its toll on business and investor sentiment.
Still, the forecast for this year's full-year growth in the MAS survey shows a big drop from the 1.5 per cent growth the economists had pencilled in last December.
With the outbreak now engulfing the world and perhaps becoming a global pandemic, the risks of a recession have risen, said Dr Chua Hak Bin, an economist at Maybank Kim Eng.
"We have lowered our GDP growth forecast to a full-year contraction of minus 0.3 per cent, from 1.1 per cent in 2020," he said, adding that Singapore will witness a two-quarter contraction, with a modest recovery in the second half.
All respondents to the survey cited the outbreak as a downside risk, while 94.1 per cent ranked it as the top reason growth may come in lower than their forecast.
The current MAS survey shows the economy will grow by between 0 per cent and 0.9 per cent this year, compared with 1 per cent to 1.9 per cent in the December poll.
The economists surveyed saw the virus outbreak hurting all sectors of the economy.
Manufacturing growth is forecast to shrink 0.3 per cent, wholesale and retail trade to contract by 0.7 per cent, and accommodation and food services by 1.6 per cent.
The economy is forecast to recover next year, expanding by 2 per cent. The growth forecast for next year ranges from 1.5 per cent to 2.4 per cent.
Economists polled were also wary of an escalation in trade tensions - with 35.3 per cent seeing it as a downside risk - and geopolitical risks, including uncertainties about the outcome of the US presidential election in November. Some 29.4 per cent identified geopolitical risks.
For the first quarter of this year, all respondents expect lower corporate profitability in year-on-year terms, and forecast a rise in corporate spreads. Meanwhile, 55.6 per cent expect private residential property prices to decline in quarter-on-quarter terms, while the remaining 44.4 per cent project that prices will remain stable.
For the whole of this year, most respondents expect corporate profitability to decline.
The majority believe private residential property prices will remain broadly unchanged, while half project that corporate spreads will rise.
Respondents predict an improvement in corporate profitability next year, with 100 per cent expecting an increase.
Most expect private residential property prices to stay flat next year, and about half project that corporate spreads will fall.
