Singapore adds more stimulus to support recession-hit economy

The city-state's economy shrank 42.9% year-on-year during the second quarter of 2020

A tugboat pulls a container vessel out of a port in Singapore on Monday. The Singaporean government's latest S$8bn of measures brings the total stimulus directed to boosting its economy to S$100bn. AFShow more

Singapore's Deputy Prime Minister Heng Swee Keat announced additional support measures of S$8 billion (Dh21.5bn/$5.8bn) to cushion the blow from the coronavirus pandemic, extending wage subsidies and aiming to shore up its hard-hit aviation and hospitality sectors.

The new set of measures, announced almost three months after the last package, adds to Singapore’s total pledged pandemic aid of almost S$100bn, Mr Heng, who is also finance minister, said in a taped speech which was aired on Monday. The measures will be financed in part by unused expenditure from earlier budgets, and won’t require additional funds.

While Singapore has managed to bring virus cases under control, the global economy “remains very weak”, Mr Heng said. “We must continue to adapt to the rapidly changing situation. We designed our measures to give us flexibility for adjustments as the crisis progresses. Some of these measures are ending soon.”

The announcement comes as the city-state has fallen into a technical recession, retail and hospitality sectors are reeling from previous “circuit-breaker” restrictions and officials have warned that further retrenchments loom this year. Data last week showed Singapore’s economy shrank a record 42.9 per cent on an annualised basis in the second quarter from the previous three months, with Trade and Industry Minister Chan Chun Sing warning there could be “recurring waves of infection and disruption”.

The latest measures won’t require any additional use of past reserves beyond those already approved, Mr Heng said. The government now projects a budget deficit of S$74.2bn for this fiscal year, S$100 million less than when the fourth package of stimulus measures was announced in May.

The Singapore dollar pared the day’s gains after the speech, and was about 0.05 per cent stronger on the day at 1.3702 to the US dollar at 4.15pm in Singapore (12.15pm UAE time).

Export figures released on Monday showed tentative signs of recovery in July, with non-oil domestic shipments jumping 6 per cent from the same time last year, beating estimates for a second straight month.

The government also announced that it has allocated S$1bn to firms that increase local worker headcount over the next six months; with wage subsidies of up to 25 per cent for each new hire under the age of 40 and up to 50 per cent for those over 40.

Some S$320m in credits will be allocated to boost domestic tourism, with the trade ministry providing details next month, and as much as S$150m in additional aid for start-up firms, including capital grant and mentorship opportunities.