SINGAPORE - The pandemic and circuit breaker measures this year lowered Singapore's gross domestic product by $11 billion and led to a spike in unemployment - but both could be higher if not for the four rounds of Budget support measures.
These and other findings were published in a feature article by the Trade and Industry and Finance ministries on Tuesday (Aug 11), in conjunction with the release of estimates that said Singapore's GDP will shrink by 5 per cent to 7 per cent in 2020.
"The circuit breaker measures, which were necessary to reduce the community spread of Covid-19 and save lives, had a negative impact on the economy," said the article, which was written with input from the Monetary Authority of Singapore.
The circuit breaker measures - including the closure of workplaces and travel restrictions - took effect on April 7, and were tightened two weeks later.
The widespread closures - and subsequent extension of the circuit breaker to June 1 - shaved $11 billion, or 2.2 per cent, off Singapore's annual real GDP, said the ministry analysts.
They explained that the number was derived from the estimated value-add lost due to firms' inability to operate at their physical workplaces during this period.
It does not include sector-specific restrictions that remained in place after June 1, such as the later resumption of retail activity at physical outlets and dining-in services on June 19, as well as delays in the restart of construction and marine and offshore engineering activities due to the outbreak in foreign worker dormitories.
They added that the four Budgets amounting to $93 billion, or almost 20 per cent of Singapore's GDP, had stemmed a further loss of 5.5 per cent in real GDP - and reduced the increase in resident unemployment rate by 1.7 percentage points.
Taken alone, the Jobs Support Scheme, which subsidises wages to help firms retain local workers, is expected to take 0.9 percentage point off the resident unemployment rate for citizens and permanent residents this year.
"This implies that, without the Budget measures, the economy could have contracted by a larger magnitude," said the analysts, adding that the four Budgets - rolled out from February to May - have supported livelihoods and prevented even more significant disruption to income and cash flows.
The Budget measures include financing schemes and rental relief for firms, productivity and IT solutions grants, wage and training support, cash payouts for the self-employed, as well as social assistance schemes such as the Temporary Relief Fund and Covid-19 Support Grant.
They acknowledged that these estimates do not take into account the longer-term impact of the pandemic, which will lead to economic scarring for many countries.
"The US and EU took six years to about a decade respectively for their labour markets to recover to what they were like prior to the global financial crisis (in 2009)," they said. "Effective short-term management, however, could avoid long-term impairment."
The impact of the Budgets may also not be felt immediately due to the economic uncertainty and the gradual resumption of consumption and investments, they said.
But, they added, the Budgets contribute to the longer-term objective of helping viable firms stay afloat and facilitating a quicker recovery. "Apart from these economic benefits, there will also be positive externalities from the public health management measures that have been put in place to safeguard Singapore from Covid-19."