Economic uncertainty continues to be a concern for Singaporeans as we battle Covid-19.
With Singapore’s economy drastically hit by Covid-19 and targeted to enter a recession this year, Minister for Trade and Industry Chan Chun Sing shared his outlook for the economy in a Bloomberg interview on Wednesday (May 20).
He said that a faster economic recovery from the Covid-19 pandemic would depend on the availability of affordable, rapid test kits and the rollout of a vaccine.
Beyond that, he also discussed how the reopening of Singapore’s economy from the gradual lifting of the ‘circuit breaker’ and working with other countries to establish travel corridors can aid in its recovery.
Here are some key takeaways from the interview:
Despite Increase In Exports, Economy Continues To Be At Risk
Non-oil domestic exports gained 9.7 per cent in April, though that was mostly due to a jump in the volatile pharmaceuticals category from a low base in the same period last year.
Despite showing a surprise increase in exports, the economy continues to face many challenges.
We are quietly encouraged by some of the positive numbers coming in for the first quarter despite the headwinds. Still, the government is not complacent as the downside risks are still many.– Minister Chan Chun Sing
Due to restrictions imposed globally to contain the Covid-19 outbreak, Singapore’s gross domestic product (GDP) plunged 2.2 per cent in the first quarter from a year earlier, the worst performance since the global financial crisis.
It’s too early to say if the worst is over for the global economy as infections rates are rising again in some places where they previously were under control.– Minister Chan Chun Sing
Labour Market Remains A Concern
Minister Chan said Singapore’s unemployment figures have not increased dramatically, largely due to governmental support from defraying wage costs.
However, the government still has plans to announce a scheme to help fresh graduates get new jobs, internship or training opportunities.
“What started out as a health crisis has now gone on to an employment and business closure issue,” he said.
“If these two issues are not handled well, it could lead to a rise in protectionist measures, possible contagion effects, and more pain in financial markets.”
The massive lockdowns imposed around the world to fight Covid-19 mean that “lost production and capabilities will take some time to recover,” Minister Chan said.
The government announced on Monday that it will begin reopening some businesses from June 2, resulting in three-quarters of the economy resuming operation.
Sectors like manufacturing, finance, insurance and wholesale trade will be able to restart more operations.
This would slowly help the economy move towards recovery.
A Rapid Test Kit Or Vaccine Roll-Out Can Help Bolster The Economy
Minister Chan added that the speed of recovery from the pandemic would depend on the availability of affordable, rapid test kits and the rollout of a vaccine.
If either one of these or both come about in the next few months, then I think there’s a much better chance of us recovering faster.– Minister Chan Chun Sing
Given that infected people may not show symptoms, a rapid test kit would aid in resuming international travel and many other activities, he said.
Until then, the government has “put to the back” activities that require a lot of social interaction, he added.
Working With Other Countries
Minister Chan said that Singapore is looking at establishing travel corridors with other countries, such as China, Australia, New Zealand, and South Korea.
For essential business travel to resume, this involves getting the countries to agree on shared protocols such as the number of days needed to isolate or quarantine an affected individual, and whether it would be done so in the receiving or sending country.
He further clarified that essential business travel refers to the travel of senior management in many multi-national companies and skilled technicians that need to maintain critical systems around the world.
He also warned against countries resorting to trade protectionist measures and competitive currency devaluations to revive their economies.
In fact, we should be looking at greater inter-dependence for higher resilience rather than independence.– Minister Chan Chun Sing
The government is set to release a final first-quarter GDP figure on May 26, and may then revise its current projection that the economy will contract 1 to 4 per cent this year.
Deputy Prime Minister Heng Swee Keat is also expected to announce details of a fourth stimulus package on the same day.
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