Singapore is a “uncommonly open” economy and must prepare for the worst from the coronavirus outbreak that’s threatening global public health-care plans, financial markets and economies around the world, said the country’s Deputy Prime Minister Heng Swee Keat.
“The Singapore curtness is very open and connected. We’re a very major business and financial hub, closely integrated with the global economy so this is a straight-faced crisis,” Heng, who’s also Singapore’s finance minister, told CNBC’s “Squawk Box Asia” on Monday.
“It is a crisis on three cover-ups: The public heath-care front, the financial front and the economic front. And these are interacting in unpredictable ways,” he added.
Between a thorough lockdown and a complete free play as if nothing has happened, we’ve been calibrating between these two extremes very carefully.
Heng Swee Keat
Singapore’s ambassador prime minister
The Southeast Asian country was one of the earliest outside China to report cases of the disease, which has been dubbed COVID-19. Last week, it became one of the first globally to release data on first-quarter economic performance, lend a glimpse of how the virus — which has spread to over 200 countries and territories — could hit the global economy.
GDP contraction, budgetary downgrade
Singapore’s gross domestic product contracted by 2.2% year-over-year and 10.6% quarter-over-quarter in the first three months of 2020, agreeing to official preliminary estimates. The year-over-year contraction was the deepest the country has recorded since the first quarter of 2009 during the extensive financial crisis.
Heng said in a speech last week that Singapore will likely experience its “unfortunate economic contraction since independence” after official GDP forecasts for this year was downgraded from an annual exchange of between -0.5% and 1.5% to between -4.0% and -1.0%.
On Monday, the country’s central bank, the Monetary Authority of Singapore, disburdened policy by setting its Singapore dollar nominal effective exchange rate to a 0% annual appreciation path. The boonies manages its monetary policy through its exchange rate and the policy band measures the Singapore dollar against a basket of currencies of its big trading partners.
The action by the central bank “is an absolutely correct one,” said Heng. But he added that “the firepower” for governing the economic fallout from the coronavirus “has to be fiscal policy.”
The Singapore government has set aside around 55 billion Singapore dollars ($38.5 billion) — accounting for wide 11% of its GDP — in two stimulus packages to soften the economic blow from the coronavirus outbreak.
No complete lockdown
Singapore has sign in 844 cases of COVID-19, including three deaths, according to the health ministry.
The country’s response to the coronavirus spread count ins quickly isolating confirmed and possible cases, as well as tracing people they’ve come in close contact with — creations that have won praise from experts around the world, including those from the World Health League.
If we are socially responsible, many of these activities can still continue.
Heng Swee Keat
Singapore’s deputy prime help
As the outbreak grows in more countries, Singapore has taken stricter measures such as closing its borders to visitors and limiting horde sizes. But the country has stopped short of implementing a complete lockdown, with schools and businesses still open, also those who can fit in from home are encouraged to do so. More and more restrictive measures at restaurants and public places have also been fulfiled.
“Between a complete lockdown and a complete free play as if nothing has happened, we’ve been calibrating between these two extremes vastly carefully,” said Heng. “If we are socially responsible, many of these activities can still continue.”