Singaporeans got perms and car repairs Tuesday when the first phase of life after lockdown began, but that will not be enough economic activity to stave off what looks to be the worst recession in the state’s history.
If Singapore’s economy shrinks between 4% and 7% in 2020 because of Covid-19, which is what the trade ministry forecast last week, that would be the biggest downturn on record. The current record is from 1964, when the post-colonial economy shrank 3.1%, according to data from the World Bank.
As an election looms, raising the stakes for decision makers, other records are being broken. The downturn forced Singapore to dip into its reserves, marking the first time that it has done so twice in a year. The island nation has tapped into savings to unveil yet another stimulus, the “Fortitude Budget,” to help those hurt by the virus emergency. The budget gives 33 billion Singapore dollars for programs such as wage subsidies, worker training and digitalization of things like payments and invoicing. Soh Pui Ming, who heads the tax division of consulting firm Ernst & Young Solutions LLP, said she is particularly impressed by the aid for small and medium enterprises (SMEs)
“The Fortitude Budget continues to provide timely financial relief to businesses and individuals, while adopting a forward-looking approach,” she said. “I am most impressed with how the government is using this downtime to help our SMEs accelerate their transformation and upskill our workforce.”
The parliament will take up debate on the budget on Thursday, which is the fourth aid package of the year, after the Unity, Resilience and Solidarity Budgets, adding up to 92.9 billion Singapore dollars in aid.
Hong Kong tailwind
Nearby Hong Kong faces an existential crisis after China passed a law to crack down on perceived security threats on the island. For business fleeing the Hong Kong turmoil, Singapore is a common alternative. Inflows have started already, with foreign currency deposits in Singapore banks in April at nearly four times the amount in April 2019, according to data from the Monetary Authority of Singapore, the central bank.
That is only one example of the tailwinds in Singapore despite COVID-19. Some businesses that will grow in 2020 are those dealing in biomedical products and information technology, according to the Ministry of Trade and Industry.
There “are pockets of resilience in the Singapore economy,” the ministry said in a press release last week.
With the economy reopening further on Tuesday, Singaporeans got to work in new ways. Some had to scan QR codes when they entered office buildings, part of a national program to trace contacts of people who get infected with the virus. Others added sanitation procedures like using machines to sterilize objects.
“We are doing our part to combat the spread of the virus by encouraging our customers to shop online,” Wendy Han, co-founder of a floral shop in Singapore called Floristique, said. “Even after more and more firms resume business as usual at their physical stores, we will still encourage our customers and our team to practice effective social distancing.”