As governments around the world moved to contain the COVID-19 virus by imposing lockdowns and shuttering businesses, the Ministry of Finance (MOF) had to quickly adjust last year’s five Budgets.
By adapting to the crisis, Singapore averted a deeper economic recession, and prevented its unemployment rate from spiking by a further 1.7 percentage points.
The pandemic-triggered recession is the worst Singapore has faced since independence, said Deputy Prime Minister Heng Swee Keat.
Singapore’s GDP contracted by 5.4 per cent in 2020.
The overall budget deficit for FY2020 is also the largest since Singapore’s independence, at $64.9 billion, or 13.9 per cent of GDP, said Mr Heng.
He added that nearly $100 billion, on top of the usual spending, was committed last year through five Budgets to support Singaporeans, help tide businesses over, and to keep everyone safe.
Mr Heng said that last week, an interim assessment released by the MOF showed that the combination of fiscal, monetary and transitional measures has helped to avoid a worse recession, avert job losses and mitigate inequality.
For example, without fiscal and monetary policy measures, Singapore’s GDP would have shrunk by at least 12.4 per cent, more than double the contraction experienced (5.4 per cent) in 2020.
The measures also saved or created an estimated 155,000 jobs on average over 2020 to 2021, preventing resident unemployment from rising a further two percentage points last year.
Economic Recovery Remains Uncertain
The global battle against Covid-19 is far from over, with many places still experiencing high levels of infection, said Mr Heng.
The recovery in global economic activity is expected to be long-drawn, highly uncertain and uneven across sectors and geographies.
The uncertainty of economic recovery is accentuated by rising protectionism over supply chains, resources, data and technology, as well as unprecedented levels of public debt globally to finance the extraordinary fiscal responses amid the pandemic.
As a small, open economy, Singapore’s economic recovery is contingent on how the global situation plays out, and the country has to adapt nimbly to the wide range of possible outcomes.
He called on Singaporeans to build a stronger Singapore that is economically vibrant and socially cohesive, a welcome home that is green and sustainable and that has the fiscal and social reserves to enable continued stability and progress.
Featured Image Credit: MCI