Coronavirus: Singapore-style stimulus not for Malaysia, Indonesia and Thailand, say economists

Name: ‘Last-generation’ Singapore hawker fights to weather pandemic
Uploaded: 2020-05-28T01:15:10.000Z
Duration: 2 min 13 s
Description: ‘Last-generation’ Singapore hawker fights to weather pandemic

The latest tranche of measures brings Singapore’s stimulus spending to US$65 billion, or about 20 per cent of GDP, putting it alongside Germany and Japan

Markets gained on hopes its neighbours would follow suit, but analysts said without deep reserves, countries should consider the risks of ultra-cheap loans

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A cyclist rides along the pier at the near-empty Merlion Park in Singapore. Photo: Bloomberg

Bhavan Jaipragas

Published: 9:15am, 28 May 2020Updated: 9:44pm, 28 May 2020

One size does not fit all. Economists say Southeast Asian governments should heed this axiom in fiscal policy as they decide whether to follow regional economic powerhouse Singapore in adding to their already massive rounds of stimulus this year.

The island republic caught observers off guard on Tuesday as the Deputy Prime Minister Heng Swee Keat announced a new S$33 billion (US$23 billion) round of support measures to save as many jobs as possible with the coronavirus pandemic expected to bring about the country’s worst ever recession.

Market watchers had expected a less substantial supplement to the three rounds of measures that Heng, who is also the finance minister, has unveiled since February. With the latest injection, Singapore’s stimulus now amounts to S$92.9 billion, or 19.2 per cent of GDP.

Germany and Japan are the only other countries that have spent close to 20 per cent of GDP in coronavirus-related stimulus.

Unlike the two economic juggernauts, however, Singapore did not borrow to fund its measures. Instead the government has drawn down S$52 billion – about 56 per cent of the total extraordinary spending – from its fiscal reserves of over S$1 trillion. Public debt in the country is fully backed by assets by law.

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‘Last-generation’ Singapore hawker fights to weather pandemic

Neighbours such as Indonesia, Thailand and Malaysia do not have such deep reserves, and while they can tap ultra-cheap loans – with interest rates at record lows – observers say economic decision makers should do so only after careful deliberation of local factors.