Question

Explain of the economic problem - Identify and relate the economic issues in Singapore relating to economic growth, employment and business continuity.

Case Study

Singapore maintained its forecast for the economy to grow gradually this year out of its worst recession, and signalled continued support for the unemployed and vulnerable sections of the population.

The economy will grow by 4.0 to 6.0 per cent this year, said the Ministry of Trade and Industry (MTI). However, the growth acceleration this year can be partially attributed to the low base set in the second quarter of 2020 when the economy shrank by 13.3 per cent - the worst in a quarter ever. The ministry raised its final estimate for the coronavirus-hit 2020, stating that the economy shrank by 5.4 per cent, making it Singapore's worst-ever recession since independence.

At a virtual briefing on Monday, MTI permanent secretary Gabriel Lim said the pace of Singapore's recovery is expected to remain uneven across sectors, with the outward- oriented segments - including trade-related services like wholesale trade and water transport - projected to benefit from the pickup in external demand. Labour market developments will remain a major drag for domestic consumption, he noted.

Mr Kenny Tan, a director at the Ministry of Manpower, said while resident employment has shown growth in recent months, bringing down the unemployment rate, the outlook remains uncertain. "Some employers will still be hesitant about adding manpower to their cost until they are more certain about the future of their businesses," he said. Mr Lim added that the government remains committed to help workers stay employed and aid those who may have lost their jobs or are vulnerable.

Analysts including Dr Chua Hak Bin of Maybank Kim Eng said support measures in Budget 2021 will likely be more targeted, and may include an extension of the Jobs Support Scheme for the hardest-hit sectors such as aviation, tourism, food services and retail. "The focus will also be on creating jobs, reskilling the workforce, supporting digital transformation and enhancing food security, he said.

Mr Jeff Ng, senior treasury strategist at HL Bank Singapore, said MTI's 2021 growth forecast reflects caution due to some concerns on major economies that have recently suffered new rounds of lockdowns. He said there is still a good chance that Singapore's economy will outperform the MTI forecast for 2021 and his own estimate of 6.3 per cent growth.

Mr Edward Robinson, deputy managing director of the economic policy group at the Monetary Authority of Singapore, said the central bank's monetary policy stance remains unchanged and appropriate. MAS expects an uptick in inflation this year.

Source: Edited and adapted from: The Straits Times, dated 15 February 2021.