Singapore will be pumping in another $5.8 billion (S$8 billion) as part of stimulus measures to support the country's economy that has taken a massive beating from the Covid-19 pandemic. The new set of measures announced by the Singapore's Deputy Prime Minister Heng Swee Keat on Monday is in addition to the $73 billion (S$100) billion announced three months back.
Singapore has been one of the worst casualties of the pandemic in Southeast Asia. The country has now slipped into a technical recession after contracting over 40 percent in the second quarter. Last week, Ministry of Trade and Industry said that Singapore's economy contracted almost 43 percent in the second quarter of 2020 compared to the previous quarter on an annualized, seasonally-adjusted basis.
Partial Relief for Singaporeans
The additional stimulus announced on Monday will be primarily in the form of wage subsiding and to help the battered aviation and hospitality sector. Heng, who is also the finance minister of Singapore, in a taped message said, "The continued support in our fight against COVID-19 will cost S$8 billion," Heng Swee Keat said in a speech.
The fresh round of stimulus will be raised by reallocating money partly from unused development expenditures from earlier budgets that were delayed due to COVID-19. Heng said that there are no plans of drawing on past reserves for these measures. Although Singapore has managed to contain the spread of the deadly virus to a great extent, the global economy continues to remain weak, Heng said.
Singapore's economy largely depends on aviation and tourism along with exports, which have been heavily impacted due to a ban on travel especially in March and April when most countries has imposed a lockdown following the coronavirus outbreak.
Economy Continues to Suffer
This is the fifth round of stimulus announced by Singapore in the past four months and definitely comes as a relief to many who have been impacted due to the Covid-19 outbreak. Besides, a slew of other relief measures were announced on Monday, which includes S$1 billion to subsidize firms that increase local worker headcount over the next six months. The government will provide wage subsidies of 25 percent for each new hire younger than 40 years old, and as much as 50 percent for those 40 or older.
The government now projects a budget deficit of S$74.2 billion for this fiscal year, S$100 million less than when the fourth package was announced in May. Singapore's economy has slipped into a technical recession after contracting over 40 percent in the second quarter compared with the previous quarter after being dragged down by weak external demand and coronavirus-led shutdown that almost halted trade completely.
The economy contracted in the second quarter primarily because of the partial lockdown measures, which the Singapore government called the "circuit breaker" that was implemented to contain the spread of the virus. This saw the government temporarily shutting down workplaces and closing schools.
Moreover, Singapore's economy contracted almost 43 percent in the second quarter of 2020 compared to the previous quarter on an annualized, seasonally-adjusted basis, its worst performance on record. In fact, the country's GDP is now expected to shrink 5 percent to 7 percent this year.