Pumping more money into Singapore economy may not help amid global uncertainty: minister

Trade and Industry Minister Chan Chun Sing says the contraction in global demand for the city state’s goods and services is a big challenge

His comments come as Singapore’s economy plunged into recession in the second quarter amid curbs to control the spread of the coronavirus

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Singapore’s Trade and Industry Minister Chan Chun Sing. Photo: Handout

Published: 9:18pm, 15 Jul 2020Updated: 9:23pm, 15 Jul 2020

The biggest economic uncertainty Singapore faces is something it can’t control – global demand for its goods and services – and in that case, additional government stimulus may not be the best remedy, according to the city state’s trade minister.

“The greatest uncertainty and the downside risks at this point in time is the global external demand, and I don’t think fiscal measures alone will be the most appropriate for this kind of challenge,” Trade and Industry Minister Chan Chun Sing said on Wednesday.

Chan’s comments come as the city state’s economy plunged into recession in the second quarter amid “circuit-breaker” restrictions to control the spread of the coronavirus. Gross domestic product declined an annualised 41.2 per cent from the previous three months, the biggest quarterly contraction on record, data on Tuesday showed.

The contraction in demand caused by the circuit breaker was within expectations and “within our control,” according to Chan, though external demand is more uncertain.

The government is “very concerned that there will be a second wave, if not a third wave or recurring waves of infection across the world, which will cause the demand from these economies to further shrink,” he said. Around the region, some countries are seeing a resurgence in coronavirus cases after lockdowns eased.

In light of this, it’s a “bit difficult for us to say when the upturn will come about,” but Singapore must position itself as a “safe harbour” for investment and talent, maintain trade links with all major economies and diversify its markets and sources of materials, Chan said.