Singapore’s partial lockdown seen costing economy S$10 billion

The Marina Bay area on the day 'circuit breaker' measures takes effect on April 7, 2020 in Singapore. (PHOTO: Ore Huiying/Getty Images)

By Abhishek Vishnoi

(Bloomberg) -- Singapore’s partial lockdown to contain the spread of the coronavirus could cost the economy about S$10 billion ($7 billion) in lost output, Maybank Kim Eng Research Pte. estimates.

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

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 said in an email, with sectors such as retail, food and beverage and construction being more labor-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. President Halimah Yacob said Thursday the government has been given approval to draw S$21 billion from past reserves to help fund part of the stimulus.

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 labor and thus “Singapore’s capacity to capitalize on any recovery in the aftermath,” he said.

(Updates with details of past reserves in fifth paragraph. An earlier version of the story corrected the estimated cost to economy in the first paragraph.)

© 2020 Bloomberg L.P.