The economy took a far bigger hit than expected in the second quarter as the circuit breaker took its toll and sent the country into its first technical recession in 11 years.

Gross domestic product (GDP) dived 12.6 per cent compared with the same period last year - markedly more than the 10.5 per cent drop economists tipped in a Bloomberg poll.

It is also much worse than in the first quarter, when GDP fell by a revised 0.3 per cent, marking the first time growth had turned negative in a decade.

The Ministry of Trade and Industry (MTI) said yesterday that the sharp fall in GDP was due to the circuit breaker measures that were implemented from April 7 to June 1 as well as weak external demand amid a global economic downturn.

The quarter-on-quarter estimates are especially stark, showing that the economy shrank a record 41.2 per cent from the first quarter to the second, signalling a technical recession for the first time since 2009.

A technical recession refers to two straight quarters of quarter-on-quarter contraction.

Trade and Industry Minister Chan Chun Sing said yesterday that the numbers show the extent of the challenges facing Singapore amid the pandemic and the effort required to restore the economy.

"The road to recovery in the months ahead will be challenging," he added in a Facebook post.

"We expect recovery to be a slow and uneven journey, as external demand continues to be weak and countries battle the second and third waves of outbreaks by reinstating localised lockdowns or stricter safe distancing measures."

The pace of recovery will also depend on how well Singapore keeps community infections low, noted Mr Chan.

National Trades Union Congress assistant secretary-general Patrick Tay said in a separate Facebook post that the numbers "paint a sombre and worrying outlook for the Singapore economy for the rest of 2020".

Mr Tay said he expects "a sharp spike in retrenchments and unemployment figures as well", ahead of second-quarter labour market data due at the end of this month.

The MTI forecast in May that the economy could contract by between 4 per cent and 7 per cent for the full year, which would make it Singapore's worst recession since independence in 1965.

The second-quarter slump was led by the construction sector, which plunged 54.7 per cent year on year, a significant deterioration from the 1.1 per cent decline in the first quarter.

"Construction output weakened on account of the circuit breaker measures, which led to a stoppage of most activities during the period, as well as manpower disruptions... to curb Covid-19, including movement restrictions at foreign worker dormitories," the MTI said.

On a quarter-on-quarter basis, construction shrank 95.6 per cent in the second quarter, far worse than the 12.2 per cent contraction in the first three months.

Service industries fell 13.6 per cent year on year in the second quarter, steeper than the 2.4 per cent decline in the previous quarter.

The only bright spot was manufacturing, which grew 2.5 per cent year on year in the three months to June 30, but this lagged behind the 8.2 per cent pace of the first quarter.

Manufacturing growth in the second quarter was primarily aided by a surge in biomedical output.

Still, weak external demand and workplace disruptions during the circuit breaker period weighed on production in the chemicals, transport engineering and general manufacturing clusters, the MTI said.

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