Singapore economy could have contracted 12.4% if not for COVID-19 Budget measures: MAS estimates
Without support measures rolled out by the Government to cushion the blow of the COVID-19 pandemic, the Singapore economy would likely have contracted by twice as much last year, according to a paper released by the Finance Ministry.
SINGAPORE: Without the support measures rolled out by the Government to cushion the blow of the COVID-19 pandemic, the economy would likely have contracted by twice as much last year, according to a paper released by the Ministry of Finance (MOF) on Thursday (Feb 11).
The interim assessment of the impact of key COVID-19 Budget measures found that the Singapore economy could have shrunk 12.4 per cent or more last year. Singapore's GDP fell by 5.8 per cent in 2020, based on advance estimates.
Using a simulation model, the Monetary Authority of Singapore (MAS) estimated that last year's five Budgets costing about S$100 billion supported GDP growth by 5.5 percentage points. The easing of monetary policy pushed up the GDP by a further 1.1 percentage points - shaving 6.6 percentage points off GDP decline.
"The COVID-19 support measures have made a significant difference to keep our people safe and preserve our livelihoods," said Deputy Prime Minister Heng Swee Keat on Thursday at the Shangri-La Rasa Sentosa Resort & Spa, where he spoke to hotel staff and some beneficiaries of COVID-19 Budget schemes.
"Job losses were averted and shocks were cushioned. More help went to supporting families in need, which went some way to mitigate inequality.
"The interim analysis is encouraging, as it showed that the schemes are achieving the outcomes that they were designed for."
The Budget measures, including the Jobs Support Scheme (JSS), may have helped save or create about 155,000 jobs on average over 2020 and 2021, MOF said.
From April to December last year, S$22.6 billion was paid out in wage support for Singaporean workers to firms under JSS. The payouts accounted for about 80 per cent of grants to businesses in 2020.
The Government has also introduced measures to help create jobs and match jobseekers with work and training opportunities. The SGUnited Jobs and Skills Package placed nearly 76,000 local jobseekers in growth sectors such as ICT, healthcare and manufacturing, MOF said.
The take-up rate for the Jobs Growth Incentive (JGI), which was introduced later in the year, was encouraging, the ministry said. JGI supports firms that create new jobs by co-paying a portion of the salaries of new local hires for one year.
In September and October, 110,000 jobseekers were hired under the scheme by 26,000 employers.
In all, companies received S$27.4 billion in grants to stay afloat. Smaller firms and firms in sectors most affected by the pandemic received more support, MOF said.
Singapore companies also benefitted from financing schemes, with around 20,000 firms accessing loans worth more than S$17 billion from March to December last year.
The Budgets in 2020 also committed S$10 billion in cash transfers and social assistance schemes for Singaporeans and households here.
Singaporean households got about S$2,000 per person on average from COVID-19 measures such as the Care & Support Package, income relief for self-employed persons and grants for those who have lost income due to the impact of COVID-19.
The Care & Support Package includes cash payouts like the Solidarity payment, the Workfare special payment for low-income workers and PAssion card top-ups for seniors.
Lower-income households received higher levels of support, resulting in the income gap narrowing to the lowest in two decades, MOF said. The Gini coefficient fell to 0.375 in 2020.
"While COVID-19 has sharpened inequalities around the world, the Budget 2020 measures have helped to mitigate these in Singapore," said MOF.
It estimated that each member of a Singapore household living in one-and-two room HDB flats received S$3,400 or nearly four times as much as those living in private properties (S$900).
Looking ahead to Budget 2021, which he will deliver next Tuesday, Mr Heng said that the global outlook remains highly uncertain and Singapore's economic recovery is expected to be uneven across sectors.
"We will continue to stay vigilant, as the path to recovery remains uncertain. We will also adapt our support to ensure that those who need it the most will continue to get help, including workers in the hard-hit sectors," said Mr Heng, who is also the Coordinating Minister for Economic Policies and Minister for Finance.