Singapore on Friday eased restrictions further and reopened pockets of the economy that were suspended due to coronavirus — but retailers are not hopeful the move would do much to lift their already struggling businesses, according to an industry association.
The Southeast Asian economy has been badly hit as measures — both overseas and domestically — aimed at containing the spread of the virus halted much of global economic activity. Singapore’s economy is expected to shrink by between 4% and 7% this year, according to the official forecast.
“Retailers are definitely facing significant financial stress during this period. Whether big or small, they’re actually finding it really difficult to meet their financial obligations,” Rose Tong, executive director of Singapore Retailers Association, told CNBC’s “Street Signs Asia” on Friday.
“They’re not very hopeful that business will be business as usual … even after the first two weeks of euphoria shopping, or what we call revenge shopping,” she said, adding that some retailers expect sales to drop by about 50% due to the weakening economy.
The country is one the worst-hit in Asia by the coronavirus outbreak, having reported more than 41,000 confirmed cases as of Thursday, according to its health ministry. Over 90% of those cases were detected among migrant workers living in dormitories, official data showed. Those workers are mostly men from other Asian countries working in low-wage jobs.
A decline in cases found outside the dormitories paved the way for Singapore to reopen its economy starting June 2, after almost two months of partial lockdown that the government called a “circuit breaker.” The further easing on Friday allows more activities to resume with precautionary measures in place, including shopping at physical retail stores and dining out.
The country’s lifting of restrictions has come earlier than some expected, which could help limit the economic slowdown in Singapore, said Selena Ling, head of treasury research and strategy at Singaporean bank OCBC.
“We could actually see some pent-up demand and retail sales could snap back a little bit in June,” she told CNBC’s “Capital Connection” on Friday.
“But I would caution that this is probably going to be a fairly muted recovery from now. The litmus test really would be probably two weeks later when we see whether there is any pick up in terms of Covid-19 cases coming back again,” she said, referring to the name of the coronavirus disease.
Ling explained that China’s experience has shown that a resurgence in cases could mute any recovery in consumer demand. Still, she said recent indicators suggest that the Singapore economy passed its trough in April.
That, along with the planned government spending, could help Singapore’s economy to register a less severe contraction of 5% this year, said Ling.
The government has announced four stimulus packages worth close to 100 billion Singapore dollars ($ 71.8 billion) — or nearly 20% of gross domestic product.