The Covid-19 outbreak is an "unprecedented crisis" that has escalated very quickly, prompting the Government to take extraordinary measures and draw up a landmark supplementary budget, Deputy Prime Minister Heng Swee Keat said yesterday.
Delivering a ministerial statement outlining the Government's thinking behind what he called the Resilience Budget, he said the coronavirus was a defining challenge for Singapore. "It is a public health crisis, an economic shock and a social test. It will challenge our resilience as individuals and as a society."
Mr Heng, who is also the Finance Minister, noted that just five weeks after he delivered his Budget 2020 speech on Feb 18, the world has slipped into a pandemic, with an estimated 410,000 people infected across 190 countries.
While Singapore acted early and decisively and was able to keep the number of cases at a manageable level in the first wave of infections, the world is now seeing successive waves and imported infections, causing countries to take public health measures, he said. But measures on the medical front to contain the pandemic have made the economic battle more difficult.
"As more countries implement their measures, the economic disruptions will be wider, deeper and more prolonged," said Mr Heng. "The global economy is now facing both a supply and demand shock."
He noted how lockdowns have had knock-on effects, given today's highly integrated global supply chains, while people staying home means spending has shrunk while business confidence is plunging in the face of growing uncertainties.
Global financial and stock markets are in turmoil too, while credit has tightened around the world.
As an open economy that is highly integrated with others, Singapore will be deeply impacted by these global shocks, Mr Heng said.
He noted that gross domestic product (GDP) estimates released yesterday showed the economy contracted by 10.6 per cent in the first quarter of this year. The Trade and Industry Ministry has also downgraded the GDP growth forecast for the year to between minus 4 per cent and minus 1 per cent.
"In economic terms alone, this will likely be the worst economic contraction since (Singapore's) independence," he said.
The new supplementary budget, which will introduce over $48 billion in new and enhanced measures, is therefore focused on three areas: protecting jobs, helping enterprises with immediate challenges, and strengthening economic and social resilience so Singapore can emerge intact and stronger.
"We cannot prevent an economic recession, as the external health and economic situation will evolve beyond our control," Mr Heng said. "But it will help us to mitigate the extent of the downturn and, more importantly, help save jobs and protect livelihoods."
The Budget is also a reminder that the virus is a test as well of Singapore's social cohesion and psychological resilience, Mr Heng said.
Concluding, he pledged that the Government will lead the way in the fight against Covid-19 by doing its best to anticipate and respond to developments, make decisions based on facts and evidence, and exercise judgment in trade-offs.
"We will stand with Singaporeans of all walks of life to battle this crisis together... (and) work with our people and institutions around the world to combat this global threat.
"This is the essence of who we are as a nation; this is the essence of who we are as a people. This is SG United," he said.