KUALA LUMPUR — Singapore’s Finance Minister Heng Swee Keat proposes spending up to 55 billion Singapore dollars (38 billion US dollars) to cushion the wealthy city-state against a looming recession triggered by coronavirus.
“As an open economy, we will be deeply impacted by these global shocks,” Heng, who doubles up as Prime Minister Lee Hsien Loong’s deputy, told parliament on Thursday afternoon.
Announcing what he termed a “resilience budget,” Heng projected that Singapore could spend the equivalent of 11 per cent of its gross domestic product to counter “a recession at least as bad as the global financial crisis.”
Singapore, which has the world’s fourth-highest GDP per capita according to International Monetary Fund (IMF) rankings, will spend over 11 billion dollars of its estimated hundreds of billions of dollars in reserves, Heng said.
Alex Holmes of British consultancy Capital Economics said that though Singapore’s economy is likely to be hit hard in the coming months, “a strong fiscal position means it has plenty of room” to spend heavily on counter-measures.
Heng’s announcement came hours after the Ministry of Trade and Industry reported that Singapore’s GDP contracted 2.2 per cent year-on-year in the first quarter of 2020.
Citing the impact of a pandemic that John Hopkins University tallies suggest has killed over 21,000 people worldwide, including two in Singapore, the trade ministry said that Singapore’s economy will shrink between 1 per cent and 4 per cent in 2020, with the depth of the recession depending on the “severity and duration of the global outbreak.”
The collapse in global travel due to the pandemic has hit Singapore hard, with the ministry stating that tourism-dependent sectors “shrank on the back of a sharp decline in arrivals.”
Visitors from China, source of around a fifth of Singapore’s tourists, have been banned since January. As the virus spread, travel bans were widened to take in other hard-hit countries, until the Ministry of Health announced on Sunday it would ban all tourists from either entering or and transiting.
The impact of restrictions has now spread into domestic industries, the trade ministry reported. “Supply chains have been disrupted as locked down workers are unable to work,” Heng said.
Reduced output in electronics, another bellweather sector, “likely reflects a fall in external demand,” the trade ministry stated.
Singapore’s coronavirus caseload remains relatively light at 631, but the number is expected to rise as around 200,000 Singaporeans attempt to return home over the coming weeks.
“Public health measures have caused severe economic disruptions,” Heng said.
The so-called resilience budget was announced a month after the scheduled annual budget, which allocated almost five billion dollars to counter the impact of coronavirus, before the spread was labelled a “pandemic.”Show