SINGAPORE - UOB Global Economics and Markets Research has lowered its baseline forecast for Singapore's economic growth this year from 1.5 per cent to 0.5 to 1 per cent, assuming the coronavirus outbreak lasts six months.
The key impact will likely come from lower visitor numbers, especially from mainland China given Chinese account for 20 per cent of total tourist arrivals, said UOB head of research Suan Teck Kin on Friday (Feb 7).
This will hit hospitality-related companies such as hotels and travel agencies, as well as some services industries like food and beverage, retail and transport, he said.
Mr Suan said that using the Sars (severe acute respiratory syndrome) outbreak as a guide and assuming a six-month duration, the first order impact of the coronavirus outbreak on most regional economies is estimated to be between zero to as much as 1.5 percentage points down from the bank's baseline forecasts.
But if the outbreak stretches further than six months, the second-order effects from trade, production and supply chain disruptions would further hit regional economies.
Consumer-related activities were hit badly during Sars, especially at the peak of the outbreak around March 2003, said Mr Suan. Gross domestic product (GDP) in Hong Kong, Taiwan and Singapore fell into contraction by the second quarter of 2003, though the subsequent rebound completely offset the weakness in the first half of that year.
He noted that most governments in this region have sufficient fiscal and monetary policy flexibility to cushion the economic impact of the current outbreak.