Singapore will roll out a strong economic package next week as part of its 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 severe acute respiratory syndrome (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 Minister for National Development Lawrence Wong, who co-chairs the multi-ministry task force set up to coordinate Singapore's response to the coronavirus.
"I think you can well anticipate a larger impact overall, which will then have a knock-on impact on Singapore too," he said in an interview with Bloomberg News.
"We are preparing for that, we are anticipating that, and that is why we will announce what the appropriate measures" are in the Budget, which will be delivered Tuesday.
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 with short-term cash-flow problems.
Mr Wong said that beyond specific sectors such as 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 added.
"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 itself 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 the travel bans are in place.
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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 OCBC widened its 2020 forecast to factor in more downside risks.
Singapore has 50 confirmed cases of the virus, one of the largest number of infections outside China. In response to the growing number of locally transmitted cases, the government last Friday raised its national disease response level to "orange", its second-highest level and the same one used during the 2003 Sars epidemic.
Separately, Mr Wong also addressed the wave of panic buying that happened when Singapore raised its disaster alert response level last Friday.
He told a news conference yesterday afternoon that the situation has stabilised, and to meet that sudden surge in demand, retailers moved stock from the warehouse into the retail outlets. "Some outlets may not be fully stocked for all items, but it is not because of shortage of supplies. It is simply a manpower and logistics issue in order to get the restocking done," he said.
"We expect all outlets of the major retailers to have normal stock levels in a day or two. We just want to continue to assure Singaporeans that our supply chains, when it comes to food and grocery items, remain robust," he added.
He also said that Singapore's diversification strategy ensures it is protected from any sudden shocks. "That has been proven, even with this last wave of sudden surge in demand."