SINGAPORE- Singapore on Tuesday announced financial packages worth around $4.5 billion to help contain the coronavirus outbreak in the city-state and weather its economic impact.
Delivering his annual budget speech, Finance Minister Heng Swee Keat also said a planned hike in goods and services tax would not take place in 2021 given the current state of the economy which recorded its lowest growth in a decade last year.
Singapore has already cut its 2020 growth forecasts due to an expected economic blow from the new coronavirus outbreak and flagged the chance of a recession this year.
“Just as the global economy was beginning to recover, the coronavirus…outbreak hit us,” said Heng. “The outbreak will certainly impact our economy…Our first concern is to protect you and your families.”
The schemes involve an S$800 million ($575 million) package to fight and contain the disease, mainly through additional healthcare funding, and a further S$5.6 billion ($4 billion) in measures to help manage its impact on businesses and jobs.
The economic packages include support for businesses to manage wage bills, corporate income tax rebates and specific schemes to help firms in the hard-hit tourism and aviation sectors.
The Southeast Asian city-state has reported 77 cases of the virus to date, one of the highest tallies outside China where it has claimed over 1,800 lives.
The economic fallout from the epidemic spread to US technology titan Apple, which warned of iPhone shortages and lower than expected revenue, while South Korea’s president called the situation in his country an economic emergency.
The Thai government’s support measures and the passage of a delayed budget bill will help ease the economic blow from a new coronavirus, the country’s central bank governor said on Tuesday.
It will take some time to assess the overall impact of the virus outbreak, which is hitting tourism and supply chains, Bank of Thailand Governor Veerathai Santiprabhob told reporters.
The Tourism Authority of Thailand expects the number of foreign tourists to fall by 5 million this year to about 35 million owning to the outbreak. Spending by foreign tourists accounted for no less than 11 percent of Thailand’s GDP last year.
A 3.2 trillion baht ($102.47 billion) budget bill for the current fiscal year, delayed since Oct. 1, was approved last week by parliament and senate.
“The good news is, the budget bill has passed… which will enable the government to inject money to help businesses and the economy,” Veerathai said.
“Steps by the government to support business operators and workers will also help alleviate the (virus) impact,” he said following the launch of interoperable QR payment between Thailand and Cambodia.
Earlier this month, the government introduced steps, such as tax breaks and soft loans, to help virus-hit businesses. Last week, it said it was planning additional measures, including ones to promote domestic tourism.
On Feb. 5, the central bank also cut its benchmark interest rate to a record low of 1.0 percent, a third reduction since August, to shore up the economy.
It will next review monetary policy and provide updated economic projections on March 25.
Southeast Asia’s second-largest economy grew 2.4 percent last year, the weakest pace in five years, hurt by declining exports declined and sluggish investment.
The central bank recently said the economy might grow less than 2 percent this year, compared with a previous forecast of 2.8 percent growth seen in December.
Meanwhile, Euro zone finance ministers discussed ways to pursue a more growth-friendly fiscal policy mix on Monday, in a potential nudge to Germany and the Netherlands to spend more as fears of a downturn grow in the wake of the coronavirus epidemic.
The 19-country euro zone has for years stuck to a broadly neutral fiscal policy in its annual recommendations, despite repeated calls from the European Central Bank and slow-growth states for it to invest more.
But weak growth last year in Germany, the bloc’s largest economy, and fears of a new downturn fuelled by the coronavirus outbreak in China are pushing Berlin to soften its stance. — Reuters