Singapore boosts stimulus by S$8 bil as recession deepens

A man receives his purchases of traditional Chinese medicinal products at a Chinese medical hall in Singapore. (AP pic)

SINGAPORE: Singapore Deputy Prime Minister Heng Swee Keat announced additional support measures of S$8 billion to cushion the blow from the coronavirus pandemic, extending wage subsidies and aiming to shore up the 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$100 billion, Heng, who is also finance minister, said in a taped speech aired on Monday.

While Singapore has managed to bring virus cases under control, the global economy “remains very weak,” 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 latest measures won’t require any additional use of past reserves beyond what was already approved, Heng said.

Unused expenditures from earlier budgets will help fund the latest measures, allowing the government to narrow the projected budget deficit this fiscal year by S$100 million since the fourth package was announced in May, to S$74.2 billion.

Further support was deemed necessary as the city-state has fallen into a technical recession, retail and hospitality sectors are struggling to recover from months of mobility restrictions, and officials have warned of further retrenchments through year-end.

Singapore’s economy shrank a record 42.9% on an annualised basis in the second quarter from the previous three months, data last week showed, with Trade and Industry Minister (MTI) Chan Chun Sing warning there could be “recurring waves of infection and disruption.”

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

Other measures announced on Monday include:

  • S$1 billion to firms that increase local worker headcount over the next six months; the government will provide wage subsidies of as much as 25% for each new hire younger than 40 years old, and as much as 50% for those 40 or older
  • S$320 million in credits to boost domestic tourism; MTI will provide details next month
  • As much as S$150 million to expand aid for start-up firms, including capital grant and mentorship opportunities.