Singapore economy 'turning the corner', but recovery still a long way to go: Chan Chun Sing
SINGAPORE: Minister for Trade and Industry Chan Chun Sing said on Monday (Nov 23) that Singapore still has a long way to go in its economic recovery, even as it looks to be turning the corner, with the third-quarter gross domestic product (GDP) shrinking at a slower rate than in the previous quarter.
Earlier on Monday, the Ministry of Trade and Industry (MTI) announced it was changing Singapore's growth outlook for 2020 again, after a 5.8 per cent contraction of the GDP in Q3 on a year-on-year basis - more than halving a record slump of 13.3 per cent in the previous quarter when the COVID-19 “circuit breaker” was in place.
The Singapore economy is now expected to shrink between 6 per cent and 6.5 per cent, compared to a previous estimate of between 5 per cent and 7 per cent.
Policymakers also offered for the first time a glimpse of their economic forecast for 2021 – a recovery into positive growth territory, with the economy envisaged to expand between 4 and 6 per cent next year.
In his remarks on Monday morning, Mr Chan said that the latest economic figures show Singapore is "on the right path, slowly but surely".
But while the situation has improved, "there is still much work to be done".
The minister outlined four factors impacting the rate of economic recovery domestically and globally.
The first two factors, which he said are within Singapore's control, are its COVID-19 infection rates and the ability of its businesses and workers to pivot and adapt to the new realities of a world with coronavirus.
"If we are able to continue to keep our infection rates low, we will be able to resume more activities and increase our interactions with the rest of the world," said Mr Chan. "This will require the continued cooperation of our people to adhere to the prevailing measures."
"We have done well and must continue to keep up the strong momentum. But we must not be complacent. Many countries around the world have seen their numbers spike again, even those who had seen some success in controlling the situation earlier," he added.
Mr Chan also revealed that the measures and programmes put in place to help businesses and workers cope in the pandemic have started to reap results.
More than 33,000 local job seekers have been placed in positions under the SG United Jobs and Skills Package.
From January to September, enterprises tapped on the enhanced Enterprise Development Grant and Productivity Solutions Grant and embarked on more than 20,000 projects to improve productivity and build capabilities - with thrice the number of applications in a similar period last year, he said.
The two factors Mr Chan said were outside Singapore's control are the geopolitical dynamics between big countries such as US and China, as well as the recurring waves of infection happening globally.
"We do not yet know how the new US administration will approach its relations with China," said Mr Chan. "But we hope both sides will dial down tensions, and return to a more open and inclusive global economic order."
And with new and more frequent lockdowns across the world, there will be a knock-on effect on global demand, which will affect export-oriented economies like Singapore, he said.
NEXT STEPS FOR SINGAPORE
The minister warned that despite the excitement over the progress of vaccine development, "it will not be the quick fix that many expect it to be".
"Manufacturing enough doses, then distributing and vaccinating a significant population of the world, will take many months, if not years," he said.
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However, if Singapore manages its controllable factors well and mitigate the risk of those beyond its control, it "can recover more quickly", said Mr Chan.
"We now have the testing capabilities, isolation facilities and healthcare capacity to manage risks from the imported cases, to ensure they do not infect the local community.
"Therefore we will be able to open our borders more. We will allow more Singapore-based business people to travel overseas, and resume bringing in the necessary professionals and workers that drive our economy and support our social services.
"We will also be able to progressively host more significant MICE events to maintain our position as a leading business node," he said.
Domestically, more activities will be allowed to resume, said Mr Chan.
"I understand many are looking forward to Phase 3. Whether we call it Phase 2X or Phase 3, what's more important is to maintain our psychological vigilance to keep up with the prevailing safe management measures, take a calibrated and progressive approach to resuming our economic and social activities in a safe and calibrated manner," he said.
MORE TARGETED SUPPORT
Mr Chan assured that the Government will continue to provide support to businesses and workers, although this will need to be more targeted and focused.
"I know many are worried about what will happen once the support schemes taper off and end over the coming year. I assure our businesses and workers that the Government will not leave anyone behind," he said.
"But just as our workers and businesses are pivoting, so will our support. Our support measures must be sustainable in the long run.
"It is not possible for us to indefinitely support business models that are no longer relevant and competitive in a COVID-19 world. Going forward, our support must be more targeted and focused on positive outcomes for our businesses and workers," he added.
Mr Chan said government support over the last few months has given businesses and workers "time to regroup and re-evaluate their business models", and that it is now time for firms to "act decisively to not only prevent further losses but to seize new opportunities".
Businesses will be supported in strengthening existing capabilities while building new ones, expanding into new markets, and digitalising and accessing consumer demand through online platforms.
And the Government will continue to "adjust our levels of support" purposefully, with a view to create good jobs and opportunities for Singaporeans, and enable businesses to grow, he added.
"While we are turning the corner, we still have a long way to go in our economic recovery," said the minister.
He said that "quantatively", it will be a "matter of time" before the Singapore economy returns to levels pre-COVID-19.
However, even if it rebounds, the economy will have changed permanently.
"When the dust settles, it will not be the same economy we knew pre-COVID-19. A new equilibrium and a new playing field will emerge," he said.
To establish the foundation for Singapore's success beyond the short to medium-term, the Government will attempt several efforts, including striking a balance between managing infection risks while gradually restoring more domestic activities and opening its borders, as well as attracting top firms to invest in Singapore, particularly in new growth areas like agri-tech, mobility and sustainability.
The Government will also support businesses and workers in their transformation and growth, improve job matching, help companies seek new revenue streams, and develop its talent pipeline and talent networks around the world.
Additionally, it will find opportunities for new free trade agreements and digital economy agreements so that companies based outside Singapore to have a greater and more assured access to the world.
"If we are able to help our businesses and workers make the necessary adjustments and pivot quickly, I have every reason to believe that we will emerge stronger from this crisis," said Mr Chan.
Asked if the Government’s economic outlook for 2021 could be too optimistic given the uncertainties he had highlighted, Mr Chan said the forecast of growth between 4 and 6 per cent has to take into account the “much lower” base from this year.
But even with the rebound next year, the economy will “hardly be able to get back” to the same footing it had at end-2019 before the pandemic struck.
“It's not just about the year-on year-growth but more importantly, the absolute level from 2019 down to 2020 and back up to 2021,” he said.
“What we are working very hard is to try our best to make sure that in 2021, the (growth) number is as close to … 2019 as possible.”
It is also important to note the “qualitative” changes in the Singapore economy as the pandemic accelerated trends such as the geopolitical issues, adoption of technology, as well as changes in production system and supply chains around the world.
All these have caused “irreversible shifts” to the global economic system, said Mr Chan.
Singapore has to adapt to the new reality, he added, noting that economic measures must keep pace with market demands by helping companies and workers to pivot to new areas.
For one, Singapore will make sure to continue helping businesses to invest in new capabilities.
“So it's not just a defensive move of preserving existing capabilities but to constantly invest in new capabilities so that they can have new products and services to capture new markets and new customers,” he said.
Likewise, skills upgrading efforts must continue so as to enable workers to enjoy “good wage growth”.