The Ministry of Trade and Industry (MTI) on Monday has downgraded Singapore’s 2020 growth outlook to an estimated range of -0.5% to 1.5%, versus the previous forecast range of 0.5% to 2.5%.

Full year growth is expected to come in at 0.5%, a further slowdown from 2019’s full year GDP growth of 0.7% as the island-country expects significant impact from Covid-19. Singapore has so far identified 75 cases of the disease, marking the second highest country outside of China behind Japan.

Traffic bans and disruption in business activities are starting to hurt Singapore’s transportation, tourism, retail and entertainment sectors, with full year tourism arrival expected to fall by nearly a third. The knock-on effect on banks, real estate, manufacturing and domestic spending is likely to be significant in the short term.

The market is watching for Singapore’sBudget 2020 to deliver more fiscal stimulus such as tax relief, utilities bill rebates, rental waivers for firms that are badly hurt by the public health crisis.

Singapore dollar took a hit since the outbreak of Covid-19 and came to its lowest level seen since September 19. USD/SGD is trading at 1.391 on Monday, reaching a five-month high. The Monetary Authority of Singapore (MAS) has signalled plenty of room for easing the currency to cushion the virus impact earlier this month. The central bank’s dovish stance has accelerated the selloff in SGD.

US retail sales came in line with expectations last Friday and consumer sentiment beat forecast. US equities climbed to record highs on solid data, although traders are keeping a close eye on the development of Covid-19 in the Asia-Pacific region.

Japan’s Q4 GDP contracted at an annualised rate of 6.3%, marking its deepest decline seen in more than 5 years. This reading is far below the consensus forecast of a 2.6% drop. This is mainly due to consumers tightening their spending in response to a consumption tax hike stated in October 19. Nikkei 225 index fell more than 1% and led the decline in Asian markets. The outbreak of Covid-19 in January this year is likely to weigh on Japan’s growth in Q1 20 as tourism receipts decline.

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