Singapore’s partial lockdown estimated to cost economy S$20 bil

Shopping street Orchard Road is completely deserted during the lockdown. (Facebook pic/leehsienloong)

SINGAPORE: Singapore’s partial lockdown to contain the spread of the coronavirus could cost the economy about S$20 billion in lost output, according to Maybank Kim Eng Research Pte.

That equates to about 2% of gross domestic product, Chua Hak Bin, a senior economist at Maybank in Singapore, said in an email.

Singapore has banned social gatherings and shut workplaces, except for essential services and key economic sectors, as part of “circuit-breaker” measures to contain virus infections. The restrictions took effect this week and will last through May 4.

Non-essential services make up about a third of total employment, slightly more than their 30% share of GDP, Chua estimates, with sectors such as retail, food and beverage and construction being more labour-intensive than “essential” businesses such as financial services or electronics manufacturing.

Singapore’s government is forecasting a contraction in the economy of 1%-4% and has committed fiscal support of almost S$60 billion, or 12% of gross domestic product, to help cushion the blow for businesses and households.

On Wednesday, a day after the partial lockdown began, the city-state reported its highest daily increase in virus cases of 142, bringing the country’s total to 1,623. There’s been a spike in cases at tightly packed dormitories housing thousands of low-wage foreign workers, prompting the government to impose quarantine measures to contain the outbreak.

Chua warned that border controls and quarantine measures may remain in place for a while, even if the Covid-19 cases come under control.

These steps, while necessary, can impede the movement of labour and thus “Singapore’s capacity to capitalise on any recovery in the aftermath,” he said.