UOB expects next month's Budget will stay "expansionary but calibrated" to target specific industries and parts of society hit by Covid-19. Its research team tips an overall deficit of $12.5 billion or 2.5 per cent of nominal gross domestic product.

The deficit for the 2020 financial year is pencilled at $74.2 billion after allocating almost $100 billion to combat the pandemic.

UOB projects operating revenue to grow to $70 billion in the upcoming fiscal year, from $63.7 billion a year earlier, with total expenditure to fall to $80 billion from $102.1 billion in 2020.

It is keeping to its call for the local economy to expand by 5 per cent in 2021, against the Trade and Industry Ministry forecast of between 4 and 6 per cent. UOB recognises that the global backdrop will likely be favourable for the economy here for the year ahead.

UOB economist Barnabas Gan said data in the second half of 2020 suggests that the economy has been recovering since the trough in the second quarter of 2020. Coupled with the fact that Budget 2021 will be the first for the new term of government for the next five years, policymakers will likely be conservative in their fiscal planning, he noted.

Mr Gan said the Budget could revisit medium-to long-term measures to develop Singapore's advanced manufacturing capabilities and digital connectivity, and accelerate industry transformation.

He anticipates five key thrusts: job creation and preservation; provision of liquidity for businesses; reinforced social safety nets; extended aid for the tourism sector; and promoting Singapore as a global-Asia node of technology, innovation and enterprise.

THE BUSINESS TIMES