Pandemic-induced recession demands a different response

THE recession that Singapore has now officially entered is unprecedented in many ways - not least its staggering scale, with a record 12.6 per cent plunge in gross domestic product (GDP) in the second quarter of the year, according to advance estimates.

It is also a services-led recession, in contrast to past downturns in which external shocks caused manufacturing to collapse instead. But there are at least two other fundamental differences, one of which bodes better for recovery than the other.

First, this is a recession which was clearly seen coming because it was, to a degree, directly caused by policy. Even before the Q2 flash figures were released on Tuesday, everyone knew that GDP growth was going to fall off a cliff because of the circuit breaker measures adopted to tackle the Covid-19 pandemic, which required much of the economy to come to a virtual standstill.