Singapore Prepares Budget for Virus Fallout Seen Worse than SARS
Singapore’s Budget Will Include a ‘Strong’ Package to Counter Virus
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Singapore will roll out a “strong” economic package next week as part of its national budget to mitigate the economic fallout from the coronavirus outbreak, with the impact on the trade-reliant city-state seen as worse than the 2003 SARS pandemic.
The increased economic threat stems from several reasons, such as China’s economy being much bigger today as well as being more consumption- and service-oriented, said Lawrence Wong, Singapore’s minister for national development who co-chairs a task force coordinating the government’s virus response.
“I think you can well anticipate a larger impact overall which will then have a knock-on impact on Singapore too,” Wong said in an interview with Bloomberg News.
“We are preparing for that, we are anticipating that and that’s why we will announce what the appropriate measures” are in the budget.
Wong declined to reveal the size of the package or whether it will be bigger than the S$230 million ($166 million) SARS relief package rolled out during the 2003 pandemic, which also battered the city-state’s economy at the time. The SARS relief package contained property tax rebates and a bridging loan program for small and medium-sized firms to help them with short-term cash-flow problems.
Wong said beyond specific sectors like tourism and hospitality that have already weakened, the broader knock-on effect could be “quite severe.“ The hit to China’s economy will have an impact on the global economy, and Singapore will “surely be impacted” in such a scenario, he said.
“We are preparing for a strong package in the coming budget to help our companies as well as to help workers stay in their jobs,” Wong said. Singapore is set to announce its budget February 18.
The city-state is already bracing for its economy to be hit harder by the coronavirus than SARS. It’s expecting as much as a 30% decline in tourist arrivals and spending this year. In a report last week, DBS Group Holdings Ltd. said it sees a decline of 1 million tourists, equal to about a S$1 billion loss in spending, for every three months a travel ban on China remains in place.
Read more on how Asean central banks may intervene as the coronavirus threat grows
DBS downgraded its 2020 growth forecast for Singapore to 0.9% from 1.4% in response to the negative impact from the virus. Nomura Holdings Inc. also cut its growth forecast to 0.3% from 1.3%, while Oversea-Chinese Banking Corporation Ltd. widened its 2020 forecast to factor in more downside risks.
Singapore currently has 47 confirmed cases of the virus, one of the largest number of infections outside of mainland China. In response to the growing number of locally-transmitted cases, the government on Friday raised its national disease response level to Orange, its second-highest level and the same one used during the 2003 SARS epidemic.
Here are more comments from Wong’s interview:
National disease response level
Community transmission has taken place, which prompted the government to raise the alert to a higher level and take more precautions, Wong said. If that’s successful, then the situation will be under control and eventually plateau down. “If it continues to worsen, then we will not rule out more stringent measures later on,” he added.
“It’s not so much whether it is orange or red, that’s just a color code, but the more important matter is what additional measures we take and additional measures would include social distancing, suspension of schools for example to order to minimize any further spread of the virus.”
Wong said the critical task for world governments is to contain the spread of the virus, calling for cooperation and transparency in information sharing to deal with the public health emergency.
Update on critically ill patients
“We hope that all of them will be able to recover. But we have to be prepared mentally that, in the nature of the disease, particularly if someone has a co-morbidity, you have an underlying issue as we have seen elsewhere in other countries -- in China and other countries -- then there is a chance that there may be a fatality or that it may become quite severe, so we have to be mentally prepared that this may be so.”
Election timing and coronavirus
“I think that’s a completely different matter. Our single focus now should be and is indeed to contain the spread of the virus.”
“All across governments, all the ministries and agencies are focused on this particular mission.”
--With assistance from Anand Menon, Richard Lewis and Michelle Jamrisko.
To contact the reporters on this story: Faris Mokhtar in Singapore at fmokhtar1@bloomberg.net;Juliette Saly in Singapore at jsaly1@bloomberg.net;Philip J. Heijmans in Singapore at pheijmans1@bloomberg.net
To contact the editors responsible for this story: Joyce Koh at jkoh38@bloomberg.net, Derek Wallbank
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