Singapore lowers growth forecast as virus hits economy

Visitors in Singapore on Monday. The city-state is one of the worst affected locations outside China, with 75 cases of the virus so far. (AFP)
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Updated 17 February 2020

Singapore lowers growth forecast as virus hits economy

  • Tourist arrivals, exports and domestic consumption affected in city-state

SINGAPORE: Singapore cut its economic growth forecast for this year on Monday as the coronavirus batters tourist arrivals and trade.

The city-state is one of the worst affected places outside China, with 75 cases of the virus so far. China has more than 70,000 infections.

Singapore downgraded its 2020 growth estimate to a range of -0.5 percent to 1.5 percent.

That compares with its previous forecast in November of 0.5 percent to 2.5 percent.

“The outbreak of the coronavirus . . . has affected China, Singapore and many countries around the world,” the trade ministry said in a statement. “In Asia, the outbreak is likely to dampen the growth prospects of China and other affected countries this year.”

Tourism arrivals have already started to decline, exports are expected to take a hit, and domestic consumption is likely to fall as people cut back on shopping and dining out, it added.

China is Singapore’s largest source of tourists and a major export destination.

The city-state was at risk of sliding into a technical recession, warned Song Seng Wun of CIMB Private Banking.

“There is a real possibility of two quarters of contraction or even two quarters of year-on-year decline,” he said.

“Mathematically it’s possible because of the integrated nature of the global supply chain and the impact of the slowdown in China that could have far-reaching implications on small trade-oriented economies like Singapore.”

As a small and open economy, Singapore is often the first to be hammered during global crises but it also recovers quickly when conditions improve.

Prime Minister Lee Hsien Loong last week warned the effect of the virus was already worse than that of the Severe Acute Respiratory Syndrome (SARS) outbreak in 2003, as economies in the region are more closely linked and raised the possibility of a recession for Singapore.

“I think the impact will be significant at least in the next couple of quarters . . . I can’t say whether we’ll have a recession or not, it’s possible, but definitely our economy will take a hit,” he told reporters on Friday.

Singapore suffered a sharp, quarterly contraction at the height of the SARS outbreak, which killed hundreds after emerging in China, but bounced back swiftly.

National Development Minister Lawrence Wong last week flagged a “strong” budget — due to be delivered Tuesday — to counter the impact of virus.

UK retailer Debenhams goes into the red again

Updated 10 April 2020

UK retailer Debenhams goes into the red again

  • Debenhams’ 142 UK stores are closed with Britain in coronavirus lockdown

LONDON: British department store group Debenhams went into administration for the second time in 12 months on Thursday, seeking to protect itself from legal action by creditors during the coronavirus crisis that could have pushed it into liquidation.

With Britain in lockdown during the pandemic, Debenhams’ 142 UK stores are closed, while the majority of its 22,000 workers are being paid under the government’s furlough scheme. It continues to trade online.

The retailer went into administration for a first time in April last year, wiping out equity investors including Mike Ashley’s Sports Direct, and is now owned by a lenders consortium called Celine UK NewCo. 

Debenhams said administrators from FRP Advisory would work with the existing management team to get the UK business into a position to re-open and trade from as many stores as possible when restrictions are lifted by the government.

Chief Executive Stefaan Vansteenkiste said that he anticipated the firm’s owners and lenders would make additional funding available to fund the administration period.

However, the group’s business in Ireland looks doomed.

Debenhams said that it expected administrators to appoint a liquidator to the 11-store Irish operation, which employs 2,000.

The moves makes Debenhams the first major retail casualty of the health crisis in Ireland, where the government, as in the UK, has closed all non-essential shops.

Ireland on Monday reported a trebling of its unemployment rate to 16.5 percent with a further surge expected later in the month.

“We are desperately sorry not to be able to keep the Irish business operating but are faced with no alternative option in the current environment,” said Vansteenkiste.