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SINGAPORE: Trade and Industry Minister Chan Chun Sing said on Monday (November 23) that Singapore still has a long way to go in its economic recovery, even as it appears to be turning the corner, with domestic product third quarter gross (GDP) contracting at a slower rate than in the previous quarter.
Earlier on Monday, the Ministry of Trade and Industry (MTI) announced that it was changing Singapore’s growth prospects for 2020 again, after a 5.8 percent contraction of GDP in the third quarter year-on-year, more than half of a record drop. from 13.3 percent in the prior quarter when the COVID-19 “circuit breaker” was in place.
Singapore’s economy is now expected to contract between 6% and 6.5%, compared with a previous estimate of between 5% and 7%.
Policymakers also gave for the first time a glimpse of their economic forecast for 2021 – a recovery into positive growth territory, and the economy is forecast to expand by 4-6 percent next year.
READ: Singapore Revisits Growth Outlook Again As Q3 GDP Slows 5.8% Slower Amid COVID-19
READ: Singapore’s exports fell 6.3% in the third quarter of 2020, slower than the previous quarter’s decline
In his remarks Monday morning, Chan said the latest economic figures show Singapore is “slowly but surely on the right track.”
But while the situation has improved, “there is still much work to be done.”
The minister outlined four factors that affect the rate of economic recovery at the national and global level.
The first two factors, which it said are under Singapore’s control, are its COVID-19 infection rates and the ability of its companies and workers to turn around and adapt to the new realities of a coronavirus world.
“If we can continue to keep our infection rates low, we can resume more activities and increase our interactions with the rest of the world,” Chan said. “This will require the continued cooperation of our people to adhere to the current measures.”
“We have done well and we must continue to maintain the strong momentum. But we must not be complacent. Many countries around the world have seen their numbers skyrocket again, even those that had had some success in controlling the situation before.” added. .
Chan also revealed that the measures and programs put in place to help companies and workers cope with the pandemic have started to show results.
More than 33,000 local job seekers have been placed in positions under SG United’s Skills and Jobs Package.
READ: IN FOCUS: After COVID-19, where is Singapore’s workforce and economy headed?
From January to September, companies took advantage of the Enhanced Business Development Grant and Productivity Solutions Grant and embarked on more than 20,000 projects to improve productivity and build capabilities, with three times the number of applications in a similar period on last year, he said.
The two factors that Mr. Chan said were beyond Singapore’s control are the geopolitical dynamics between large countries like the United States and China, as well as the recurring waves of infection that occur globally.
“We still don’t know how the new US administration will approach its relations with China,” Chan said. “But we hope that both sides will reduce tensions and return to a more open and inclusive global economic order.”
And with new and more frequent closings around the world, there will be a ripple effect on global demand, hitting export-oriented economies like Singapore, he said.
NEXT STEPS FOR SINGAPORE
The minister warned that despite enthusiasm for the progress of the vaccine development, “it will not be the quick fix that many hope.”
“Making enough doses, then distributing and vaccinating a significant population of the world, will take many months, if not years,” he said.
READ: Johor to develop agriculture and export more food to Singapore, says senior minister on economic turn of COVID-19
However, if Singapore manages its controllable factors well and mitigates the risk of those outside its control, “it can recover more quickly,” Chan said.
“We now have the testing capabilities, the isolation facilities, and the healthcare capacity to manage the risks of imported cases, to ensure they do not infect the local community.
“We will therefore be able to open our borders further. We will allow more Singapore-based entrepreneurs to travel abroad and re-recruit the professionals and workers needed to boost our economy and support our social services.”
“We will also be able to progressively host larger MICE events to maintain our position as a leading business node,” he said.
At the national level, more activities will be allowed to resume, Chan said.
“My understanding is that many are looking forward to Phase 3. Whether we call it Phase 2X or Phase 3, what is more important is maintaining our psychological vigilance to keep up with the prevailing safe management measures, taking a calibrated and progressive approach to resuming our economy and social activities in a safe and calibrated way, “he said.
MORE TARGETED SUPPORT
Mr. Chan assured that the Government will continue to provide support to companies and workers, although this should be more specific and focused.
“I know that many are worried about what will happen once the support schemes diminish and end during the next year. I assure our companies and workers that the government will not leave anyone behind,” he said.
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“But just as our workers and companies are turning, so will our support. Our support measures must be sustainable in the long term.
“It is not possible for us to indefinitely support business models that are no longer relevant and competitive in a COVID-19 world. Going forward, our support must be more specific and focused on positive outcomes for our companies and workers,” he added.
Chan said that government support in recent months has given companies and workers “time to regroup and re-evaluate their business models,” and that now is the time for companies to “act decisively not only to avoid more losses but opportunities “.
Businesses will be supported to strengthen existing capabilities while building new ones, expanding into new markets, and digitizing and accessing consumer demand through online platforms.
And the government will continue to “adjust our levels of support” on purpose, with a view to creating good jobs and opportunities for Singaporeans and allowing businesses to grow, he added.
“While we are turning the corner, we still have a long way to go in our economic recovery,” said the minister.
He said that “quantitatively”, it will be “a matter of time” before Singapore’s economy returns to pre-COVID-19 levels.
However, even if it recovers, the economy will have changed permanently.
“When the dust settles, it will not be the same economy that we knew before COVID-19. A new balance and a new playing field will emerge,” he said.
To lay the foundation for Singapore’s success beyond the short to medium term, the Government will attempt various efforts, including balancing between managing infection risks while gradually reestablishing more national activities and opening its borders as well. how to attract major companies to invest in Singapore, particularly in new growth areas such as agricultural technology, mobility and sustainability.
The Government will also support businesses and workers in their transformation and growth, improve job matching, help companies seek new sources of income, and develop their talent pool and talent networks around the world.
Furthermore, you will find opportunities for new free trade agreements and digital economy agreements for companies based outside of Singapore to have greater and more secure access to the world.
“If we can help our companies and workers make the necessary adjustments and turn quickly, I have every reason to believe that we will emerge stronger from this crisis,” Chan said.
When asked if the government’s economic outlook for 2021 could be overly optimistic given the uncertainties it had highlighted, Chan said the forecast for 4-6 percent growth should take into account this year’s “much lower” base. .
But even with next year’s rebound, the economy “will hardly be able to return” to the same level it was in late 2019 before the pandemic hit.
“It’s not just about year-on-year growth, but more importantly, the absolute level from 2019 to 2020 and up to 2021,” he said.
“What we are working very hard for is doing everything we can to make sure that in 2021, the (growth) number is as close to … 2019 as possible.”
It is also important to note the “qualitative” changes in Singapore’s economy as the pandemic accelerated trends such as geopolitical issues, technology adoption, as well as changes in the production system and supply chains around the world.
All of this has led to “irreversible changes” in the world economic system, Chan said.
Singapore has to adapt to the new reality, he added, noting that economic measures must keep pace with market demands by helping companies and workers shift into new areas.
On the one hand, Singapore will ensure that it continues to help companies invest in new capabilities.
“So it’s not just a defensive move to preserve existing capabilities, but to constantly invest in new capabilities so they can have new products and services to capture new markets and new customers,” he said.
Likewise, efforts to improve skills must continue so that workers can enjoy “good wage growth”.
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