(Bloomberg) — Singapore’s economy had a bigger contraction in the second quarter than previously estimated, signaling a long recovery ahead for the trade-reliant nation.
Gross domestic product plunged an annualized 42.9% in the second quarter from the previous three months, according to final estimates from the Ministry of Trade and Industry released Tuesday. That was worse than a previous estimate of a 41.2% contraction and compares with a forecast of -43% in a Bloomberg survey of economists.
The economy, which is already in a technical recession, is set to shrink 5% to 7% in 2020, compared with a previous official forecast of a 4% to 7% contraction, the ministry said. On a year-on-year basis, the economy shrank 13.2% in the second quarter, compared with an earlier estimate of -12.6%.
“The outlook for the Singapore economy has weakened slightly since May,” according to the MTI statement. “The subdued external economic environment will continue to pose a drag on several of Singapore’s outward-oriented sectors,” while the reopening of borders is likely to be slower than previously anticipated, it said.
The lockdown has pummeled retail and tourism businesses and crippled construction output, while exports have slumped because of weak global demand. Even though the economy has gradually reopened and the government has pumped in stimulus measures worth more than 19% of GDP, the recovery remains uncertain and companies are bracing for further job cuts.
The data showed sharp contractions in key industries:
Manufacturing declined an annualized 31.7% in the second quarter from the previous three monthsConstruction plunged 97.1%Services contracted 37.4%
Singapore’s dollar was little changed at S$1.3746 against the U.S. dollar after the report.
The MTI said sectors reliant on foreign workers residing in dormitories will be slow to resume activity as the process to clear them for work has taken longer than expected. Most of Singapore’s virus infections have been among migrant workers living in those dormitories, several of which have been quarantined.
In a separate report, Enterprise Singapore revised its forecast for non-oil domestic exports upwards, projecting growth of 3% to 5% compared with a decline previously. Exports performed better than expected in the second quarter, due to sector-specific trends, the agency said. Non-monetary gold and pharmaceuticals, as well as electronic exports, grew in the quarter.
Singapore’s release follows reports last week that showed uneven economic performance across the region. Indonesia’s economy contracted in the second quarter for the first time in more than two decades, while the Philippines suffered its deepest plunge on record. At the same time, Chinese exports unexpectedly jumped in July amid a rekindling in global demand.
(Updates with comments from MTI statement starting in fourth paragraph.)
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©2020 Bloomberg L.P.
EU looks to fast 5G, supercomputers to boost virus-hit economy – TheChronicleHerald.ca
By Foo Yun Chee
BRUSSELS (Reuters) – The European Commission on Friday urged the 27-country bloc to work together to speed up the rollout of fibre and 5G networks to boost the region’s virus-hit economy and secure its technology autonomy.
EU countries should develop a best practices toolbox by March 30 with the aim of cutting cost and red tape, provide timely access to 5G radio spectrum and allow for more cross-border coordination for radio spectrum for 5G services, the EU executive said.
The coronavirus outbreak showed how important internet services and 5G are, European digital chief Margrethe Vestager said.
“We have seen the current crisis highlight the importance of access to very high-speed internet for businesses, public services and citizens, but also to accelerate the pace towards 5G,” she said in a statement. “We must therefore work together towards fast network rollout without any further delays.”
The Commission also proposed a recommendation to boost research and activities to develop new supercomputing technologies.
“Keeping up in the international technological race is a priority, and Europe has both the know-how and the political will to play a leading role,” Internal Market Commissioner Thierry Breton said in a statement.
The Commission is investing 8 billion euros($9.46 billion)in the next generation of supercomputers.
(Reporting by Foo Yun Chee; Editing by Tomasz Janowski)
Charting the Global Economy: Fed Signals Rates on Hold for Years – BNN
(Bloomberg) — The Federal Reserve signaled it will keep its benchmark interest rate near zero through 2023 to help the world’s largest economy recover from the coronavirus pandemic.
Cheap borrowing costs are fueling demand for U.S. housing and leaving builders brimming with optimism in the process. In China, retail sales and industrial output are on the mend, while in the U.K., the virus-related shutdowns are having a large negative impact on youth employment.
Here are some of the charts that appeared on Bloomberg this week, offering insight into the latest developments in the global economy:
The global economic slump won’t be as sharp as previously feared this year, though the recovery is losing pace and will need support from governments and central banks for some time yet, according to the OECD.
The Federal Reserve’s so-called dot plot, which the central bank uses to signal its outlook for the path of interest rates, shows that officials expect no change in policy this year and borrowing costs near zero through 2023.
Homebuilder optimism rose to a record in September, with low mortgage rates driving a housing boom that has boosted the pandemic economy, National Association of Home Builders data show.
The U.K.’s lockdown hit young workers particularly hard, with employment in the 16-24 age category falling by 156,000. That may reflect the share of young workers in hotels, restaurants and bars, a sector devastated by the pandemic.
China’s economic recovery from Covid-19 accelerated, spurred by a rebound in consumption as virus restrictions eased and larger-than-expected gains in industrial output. Retail sales rose for the first time this year in August, by 0.5% from a year earlier, while industrial production expanded 5.6%, against a forecast of 5.1%.
Scoring 75 emerging-market and frontier economies, Bloomberg Economics finds that Asia leads in getting closer to pre-outbreak norms, with some countries in Africa and Eastern Europe also outperforming. Latin America is still struggling to contain the pandemic, with 18 of the bottom 25 in the ranking in Latin America or the Caribbean.
Saudi Arabia’s crude exports dropped to the lowest since at least 2016 in the second quarter as it led a campaign alongside Russia to curb oil production following a coronavirus-induced price crash. While the effort yielded a stark turnaround in prices in May and June, Saudi revenue from oil sales still plunged almost 62% in the three-month period from a year earlier.
South Africa is among the countries with the highest percentage of smokers globally, with almost one in every three adults lighting up. So when the government banned cigarette sales for about five months of the nation’s Covid-19 lockdown, some 90% found a workaround.
©2020 Bloomberg L.P.
Global shares mixed amid worries on coronavirus, economy – CTV News
NEW YORK —
Stocks are drifting in mixed trading on Wall Street Friday, as another zig-zag week for markets closes out following their abrupt loss of momentum this month.
The S&P 500 was down 0.1% in morning trading after giving up a small gain in the first few minutes of trading. It’s still on pace for a gain of 0.4% this week after a two-day slump followed up on a two-day gain.
The Dow Jones Industrial Average was virtually flat at 27,901, as of 10:23 a.m. Eastern time, and the Nasdaq composite was up 0.1%. Both were flitting between small gains and losses. Smaller stocks were stronger, with the Russell 2000 index of small caps up 0.8%.
Analysts warned that the day’s trading could be even bumpier than usual. Futures and options on stocks and indexes are set to expire in an event known as “quadruple witching,” which can drive swings in prices.
Stocks have already swirled this week despite the Federal Reserve’s saying it expects to keep short-term interest rates at record lows through 2023. Low rates typically turbocharge the market by encouraging investors to pay higher prices for stocks, but some investors may have been looking for the Fed to be even more aggressive.
Growth in some areas of the economy has also slowed after unemployment benefits and other aid from the federal government expired, and partisan disagreements in Congress are holding up a possible renewal of support. Investors say it’s essential that such aid arrives.
Rising tensions between the world’s two largest economies are also continuing to keep markets on edge. The United States said on Friday that it will ban the downloads of the Chinese apps TikTok and WeChat on Sunday. It cited national security and data privacy concerns.
President Donald Trump’s targeting of the Chinese tech industry has caused intermittent worries in the market about a possible retaliation against the U.S. industry.
Big Tech stocks already stumbled sharply this month on worries that their prices have grown too expensive following their virtuosic performance through the pandemic. Surging shares of Apple, Microsoft, Amazon and others helped carry Wall Street back to record heights, even as the pandemic walloped much of the economy, as the coronavirus accelerated work-from-home and other trends that benefit them.
But they suddenly lost momentum two weeks ago, causing the market to swing with them. Because these companies have grown so massive, their stock movements have huge sway over broad market indexes, such as the S&P 500.
On Friday, several Big Tech stocks were swinging from gains to losses. Apple was down 0.9%, and Microsoft was down 0.5%, but Facebook was up 0.4%.
Also on the long list of concerns for markets is how the pandemic progresses, whether a vaccine for COVID-19 could indeed be available in early 2021 as many investors expect and what November’s U.S. presidential election will do to the economy.
Treasury yields remain very low, showing the powerful strength of the Federal Reserve and continued expectations by bond investors for only modest economic growth and inflation. The yield on the 10-year Treasury dipped to 0.68% from 0.69% late Thursday.
A preliminary report on Friday said that consumer sentiment is improving at a faster pace than economists expected, which is key for an economy where spending by consumers is the main driver. But it follows other reports this week that showed growth in retail sales slowed last month and the number of layoffs across the country remains stubbornly high.
Other stock markets around the world made mostly modest moves.
In Europe, the German DAX lost 0.1%, and the French CAC 40 sank 0.8%. The FTSE 100 in London fell 0.4%.
Asian markets rose. Japan’s Nikkei 225 added 0.2%, South Korea’s Kospi gained 0.3% and Hong Kong’s Hang Seng climbed 0.5%. Stocks in Shanghai rose 2.1%.
Benchmark U.S. crude oil rose 0.7% to $41.26 to per barrel. Brent crude, the international standard, gained 0.3% to $43.41 per barrel.
AP Business Writer Yuri Kageyama contributed
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