SINGAPORE (BLOOMBERG) - Singapore will roll out a "strong" economic package next week as part of its national Budget to mitigate the economic fallout from the coronavirus outbreak, with the impact on the trade-reliant economy seen as worse than during the 2003 Sars pandemic.
The increased economic threat stems from several reasons, such as China’s economy being much bigger today as well as being more consumption- and service-oriented, said Mr Lawrence Wong, Minister for National Development who co-chairs the multi-ministry task force set up to coordinate Singapore's response to the virus outbreak.
“I think you can well anticipate a larger impact overall which will then have a knock-on impact on Singapore too,” Mr Wong said in an interview with Bloomberg News.
“We are preparing for that, we are anticipating that and that’s why we will announce what the appropriate measures” are in the Budget, which will be announced on Feb 18.
Mr Wong declined to reveal the size of the package or whether it will be bigger than the $230 million Sars relief package rolled out during the 2003 crisis, which also battered Singapore's economy at the time. The Sars relief package contained property tax rebates and a bridging loan programme for small and medium-sized firms to help them with short-term cash-flow problems.
Mr Wong said beyond specific sectors like tourism and hospitality that have already weakened, the broader knock-on effect could be “quite severe.“ The hit to China’s economy will have an impact on the global economy, and Singapore will “surely be impacted” in such a scenario, he said.
“We are preparing for a strong package in the coming budget to help our companies as well as to help workers stay in their jobs,” Mr Wong said.
Singapore is already bracing for its economy to be hit harder by the coronavirus than Sars. It is expecting as much as a 30 per cent drop in tourist arrivals and spending this year. In a report last week, DBS Group Holdings said it sees a decline of one million tourists, equal to about a $1 billion loss in spending, for every three months travel bans are in place.
DBS downgraded its 2020 growth forecast for Singapore to 0.9 per cent from 1.4 per cent in response to the negative impact from the virus. Nomura Holdings also cut its growth forecast to 0.3 per cent from 1.3 per cent, while Oversea-Chinese Banking Corporation widened its 2020 forecast to factor in more downside risks.
Singapore currently has 47 confirmed cases of the virus disease, now named Covid-19, one of the largest number of infections outside of China. In response to the growing number of locally-transmitted cases, the government on Friday raised its national disease response level to Orange, its second-highest level and the same one used during the 2003 Sars epidemic.