With the unprecedented sum of close to $100 billion allocated in Budget 2020 and 2021, Singapore’s economy has gotten back on a firmer footing, two years after the coronavirus started spreading.
Singapore’s economic growth for 4Q2021 – which covers the period between October and December – expanded by 6.1% y-o-y, slower than the 7.5% uptick in the preceding quarter.
For the full-year, the republic’s Gross Domestic Product (GDP) was up by 7.6%, up from 7.1% guided by advance estimates, the Ministry of Trade and Industry (MTI) announced on Feb 17.
Meanwhile, the resident unemployment rate has come down to 3.2%- close to pre-pandemic levels. The median income of full-time employed residents grew by around 1% in real terms last year, after a decline of 0.4 %in 2020.
Even as Singapore looks forward to a “steady recovery” with a growth rate of 3% to 5% this year, Finance Minister Lawrence Wong cautioned that it will not be free of risks.
“The global economy is still vulnerable to pandemic-related risks and further supply chain disruptions, while geopolitical and security risks loom,” Wong said in his inaugural Budget speech on Feb 18.
Dubbed ‘Charting Our New Way Forward’, Budget 2022 seeks to give Singaporeans the confidence to embrace the journey forward.
“Every Singaporean has a stake in our society. Everyone’s contributions matter and they will not be left to fend for themselves when times are down. Strengthen the assurance that whatever the challenges we face, we will always have each others’ back,” said Wong.
In this vein, the government is setting aside $500 million in a Jobs and Business Support Package to help workers and businesses that are still feeling the heat from the pandemic-related measures.
See also: Forging ahead with courage
Under this, grants will be given out to small and medium-sized enterprises (SMEs) that have been the most affected by the Covid-19 restrictions such as those in the food and beverage, retail, tourism and hospitality sectors.
SMEs in eligible sectors will also get a payout of $1,000 per local employee, up to a cap of $10,000 per firm, under the Small Business Recovery Grant.
Local sole proprietors and partnerships in eligible sectors, as well as hawkers, and market and coffeeshop stallholders licensed by the Singapore Food Agency who do not hire local employees, will also receive a $1,000 payout.
Meanwhile, the Jobs Growth Incentive – which supports employers in expanding the number of their local hires – will be extended by six months to September 2022.
This extension will cover those who face greater difficulty finding jobs, such as mature workers who have not been employed for six months or more, persons with disabilities, and ex-offenders, said Wong.
Workers who continue to face income-loss due to the pandemic can apply for the Covid-19 Recovery Grant, which has been extended till the end of the year.
Wong also rolled out a $560 million support package to help families defray the cost of daily expenses and rising utilities.
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As part of this, all Singaporean households will receive another $100 in Community Development Council (CDC) vouchers which can be used at participating heartland shops and hawker stalls..
Additionally, the GST Voucher - U-Save rebates will be doubled for the rest of the year, meaning that eligible households can receive further rebates of up to $285.
A turning point
Market watchers have taken well to the Budget 2022 package which comes after unprecedented fiscal support through the two years that the pandemic has been around for.
“Budget 2022 signals a cautiously positive outlook for Singapore going forward, even while underpinned by concerns around rising global inflation and uncertainties of how Covid-19 will play out,” says Paul Kent. Calling innovation, upskilling and industry transformation the “hallmarks of Singapore’s remarkable progress,” the Partner in the Advisory arm of KPMG Singapore says he was not surprised that these verticals continued to play an important role in this budget.
Meanwhile, Irvin Seah, Senior Economist at DBS Bank notes that this year’s Budget marks a turning point in Singapore’s fiscal policy. For one, the policy thrusts have shifted from crisis management to addressing longer-term policies that will harness the relevance of the republic and its citizens and companies in a post-Covid world.
Agreeing, Selena Ling, chief economist at OCBC Bank quipped that the Budget showed glimpses of what life may be look like in the new normal. “This trend will likely continue for years to come as we move past the pandemic and adjust to life in the new economy,” she adds.
Cover image of Minister Lawrence Wong: MCI
