Singapore is facing a recession

The economic crisis comes overnight and hits a spoiled society

Singapore's economy is facing a sudden collapse due to the corona virus. As a precaution, congresses are being canceled and companies are switching to crisis mode. After an infection at the DBS bank, an entire tower was evacuated in the business district.

The city-state of Singapore is clean, humid and hot. The coronavirus only survives briefly in this environment. But the virus does not seem to care much: The small republic has the greatest susceptibility to date of the Southeast Asian countries with 67 infections far ahead of Hong Kong and Thailand. What is of particular concern to the authorities here is the fact that well over half of them have been infected through local transmissions.

Unfamiliar travel warnings

Prime Minister Lee Hsien Loong said on Friday that he cannot say whether Singapore is facing a recession. In any case, the expansion puts the city-state in a completely unfamiliar position: the country is suddenly one of the travel destinations to be avoided. South Korea, Israel, Qatar, Kuwait and the Malaysian state of Sarawak have issued warnings to this effect; India and the UK have recommended precautionary measures such as voluntary isolation when traveling from this area. Over the decades, the local population has got used to travel warnings because other destinations such as Hong Kong, Thailand or Indonesia were often considered unsafe. Now suddenly you are in the middle of the talk yourself.

The uncertainty has moved in, so to speak, overnight and has hit the glamorous business district after an infection at the local big bank DBS. With the “Orange” warning level, which the government issued last Friday, companies, associations and schools have been asked to refrain from larger gatherings and to take additional precautionary measures. This includes the introduction of geographically separate shifts, work from home, video conferences and chat rooms instead of meetings and travel as well as mandatory temperature measurements before starting work and when entering buildings. Caution is currently particularly high in the new Marina Bay Financial Center (MBFC) financial district. Bank branches no longer just measure the temperature of customers, they also record personal details.

Bankrupt vultures in the temples of consumption

More drastic than these precautionary measures in the workplace are the economic consequences: The mice area - an acronym for meetings, incentives, conferences, exhibitions -, an essential part of tourism in this country, is currently collapsing. The Singapore airshow, in which Swiss exhibitors such as Ruag, Aerolite, SR Technics and Kopter Group as well as the armaments chief Martin Sonderegger and the brigadier Hugo Roux take part, just missed the cancellation; the exhibition was canceled by around 15%, including from major American manufacturers. In the meantime, countless other conferences have been canceled or postponed, including events of the Swiss Chamber of Commerce (SwissCham) and the Stars Symposium, which is scheduled for the end of February. The Food & Hotel Asia scheduled for the beginning of March, at which 80,000 people were expected, has been canceled.

At the airport, there are already 20,000 fewer arrivals per day than at normal times. The Singapore tourism authority, which recently announced a record 19.1 million arrivals for 2019, now expects a drop of 25 to 30% for 2020. Given the corresponding revenue of 27 billion sing. US $ (around 19 billion CHF), the losses are likely to amount to several billion. This particularly affects the hotel industry, including the Marina Bay Sands (MBS) casino, which is dependent on Chinese visitors, but also restaurants and retailers, whose sales fell by 2.8% in the past calendar year. The bankrupt vulture has been around for a long time, especially in the oversized range of shopping centers.

Symbol of uncertainty: hamster purchases

In terms of macroeconomic consequences, comparisons with Sars always seem somewhat hand-knitted, because China's economy is now $ 14,000 instead of $ 1,500 billion back then. But they provide clues that show the vulnerability of small open economies: Singapore's economic output fell 0.3% in the second quarter of 2003 (compared to the same period last year). That doesn't seem very dramatic at first. Ultimately, however, the slump was enormous, with GDP still increasing by 4.3% in the previous quarter. If you take the growth of 0.7% in the fourth quarter of 2019 as a corresponding new basis, a crash into the deep red area is programmed for the coming months.

For the Singaporean population used to growth and success stories - especially the younger generation, for whom recession and Sars are foreign words - this is a completely new experience. This includes in particular a phenomenon that was not thought possible in this country - namely hamster purchases and empty shelves. After the government raised the warning level, there was a rush of worried consumers in supermarkets, who stocked up on noodle soups, toilet paper and similar products. This in turn called on the Prime Minister on Sunday, who addressed the nation and assured that there were enough essential goods in compulsory stocks.

Indonesia and Thailand - more inaccurate surveys?

Concern is currently growing in other countries in the region - and so is hysteria. Thailand has recently recorded the 33rd case of the disease; In response and out of concern about the introduction of the virus, the authorities in Bangkok have banned the cruise ship “Westerdam” with 1,455 passengers from docking in the nearby Laem Chabang port of Pattaya - although no case of illness has been reported on board. Compared to Singapore, which is ten times smaller, the infection rate in Thailand is already within tight limits.

This is even more true of Indonesia: notwithstanding the high number of tourists in Bali and despite the brisk business traffic between China, Jakarta and Surabaya, not a single infection has yet been reported from there. That also leads to speculation. For example, to the assumption that in the comparatively underdeveloped health system of the country any infections may not be recorded at all.