More government stimulus is not entirely helpful for Singapore's economic recovery, Minister for Trade and Industry Chan Chun Sing said in an interview with Bloomberg on Wednesday, July 15.
More stimulus might not help
Fiscal measures alone are "not the most appropriate" for the challenge of a reduction in global external demand that Singapore is facing, he said.
Chan was answering the interviewer's question on whether there is a need for another stimulus package on top of the 20 per cent of GDP -- totalling nearly S$100 billion -- that has already been announced.
The question was premised on "the massive contraction" the economy saw in the second quarter, which saw it entering a technical recession for the first time since 2009.
Global external demand not something Singapore can control
Chan explained that the greatest uncertainty in Singapore's economy comes from global external demand for Singapore's goods and services, which is the biggest downside risk for the country currently.
He elaborated that the Covid-19 pandemic has brought about closures in major economies, and that Singapore is concerned a second, third, or even recurring waves of the infection would cause demand for economies to shrink further.
While the contraction seen within Singapore is largely attributable to circuit breaker measures and are within the state's expectations and control, what the state cannot control is the external demand and situation beyond Singapore and how that will have repercussions on Singapore's economy, he said.
What Singapore is doing to help its economy recover
When asked when Singapore's GDP can see an upturn, Chan explained that while external demand is not within the country's control, what it can do is to position Singapore positively for its eventual recovery.
Here are the measures Chan said the state is taking:
- Maintain trade links with all major economies, continue diversifying its links with other economies, and diversify its markets and sources of material;
- Work with like-minded countries to uphold trading system and resist protectionist tendencies brought about by the Covid-19 pandemic;
- Continue to save businesses and help them transform;
- Continue to upgrade skills of workers as digital skill sets for both businesses and workers are critical for Singapore's recovery.
If these are done well, Singapore's economy will be well poised for recovery, he said.
You can watch the entire interview here.
Top image via Bloomberg