SINGAPORE (June 7): The Covid-19 pandemic, a “crisis of a generation”, is not merely a healthcare crisis that is causing economic woes across the world.
“Externally, we have to navigate the changing strategic landscape. COVID-19 has worsened relations between the US and China. Actions and counter-actions are raising tensions day by day,” said Prime Minister Lee Hsien Loong on June 7.
“It will become harder for countries to stay onside with both powers. It will be a more dangerous world for a small country like Singapore,” he said, reiterating the same point he made in an essay published by Foreign Affairs on June 4.
The country needs to ensure its security and protect its interests when dealing with other countries. “We must also work with like-minded countries to support free trade and multilateralism, and enhance our voice and influence in the world,” he said.
Lee warns that Covid-19 will remain a problem for at least a year, if not longer, before vaccines become available. “We will have to learn to live with COVID-19 for the long term, as we have done in the past with other dangerous infectious diseases, like tuberculosis,” he said.
As such borders are likely to remain restricted, and that Singapore, whose annual trade value is more than three times its GDP, will suffer.
The government's current estimates for this year's GDP is a contraction of between 4 and 7% - the steepest ever.
“We will not be returning to the open and connected global economy we had before, anytime soon. Movement of people will be more restricted. International travel will be much less frequent,” said Lee, adding that aviation, hotels and tourism, will take a long time to recover, and perhaps, not fully so.
Countries, used to free flow of goods and services, will be forced to be more self-reliant for essentials including food or critical medical supplies. Just recently, Singapore bought eggs from Poland and shrimps from Saudia Arabia - both of which are not Singapore's traditional sources of such food supplies.
“This will have strategic implications. Countries will have less stake in each other’s well being. They will fight more over how the pie is shared, rather than work together to enlarge the pie for all. It will be a less prosperous world, and also a more troubled one,” said Lee.
He urges businesses and people here to prepare for a very different future. “Companies big and small will be hit hard. Some industries will be permanently changed. Many will have to reinvent themselves to survive,” he said.
Naturally, retrenchments and unemployment numbers will go up. Jobs will disappear and workers need to learn new skills. “The next few years will be a disruptive and difficult time for all of us,” he said.
Despite the challenges, Lee believes that Singapore has in place the capital and capabilities to ride through this crisis.
For one, Singapore has long enjoyed this reputation as a connected global hub for trade and investments.
While some flows will be diverted or dry up, new ones will open up. “There will still be overseas markets, and opportunities for international partnerships. Singapore is well placed to connect ourselves to the new channels and flows, and create new businesses and jobs to replace those lost. We just have to work harder and smarter at it,” he said.
In addition, way before the crisis, Singapore has been trying to transform its economy. There are comprehensive plans for companies and workers to build newer and more relevant capabilities.
“Nobody can predict what exactly the world will look like after COVID-19 but however things turn out, these Future Economy strategies will stand us in good stead. We need to pursue them even more vigorously now,” said Lee.
The government is also making it its “biggest priority” to help Singaporeans keep their jobs or find new ones, especially for the older demographic of those in their 40s and 50s.
“An even stronger and better Singapore will emerge from this crisis,” said Lee.
