In a press conference held on Tuesday (11 Aug), Trade and Industry Minister Chan Chun Sing announced that Singapore needs to move in another direction, after describing the nations “worst quarterly performance on record”.
The Ministry of Trade and Industry (MTI) now expect a year-on-year contraction of 5% and 7%, compared to the initial 4% to 7% projection.
Private economists’ predicted a downward drop of 12.9%. However, the nation’s quarterly gross domestic product (GDP) declined by 13.2% year on year in April through June, a sharp 0.3% decrease from the first quarter. The MTI informed that “the outlook for the Singapore economy has weakened slightly since May”.
The anticipated return to the old normal is hoped for by many. Unfortunately, quick recovery and return to the ways of the past are gone. The “painful truth” is that “we are not returning to a pre-COVID-19 world” and that recovery will be slow and unlikely to be smooth sailing.
“We can expect recurring waves of infection and disruptions,” he said.
Mr Chan also highlighted a few global changes that Singapore has to anticipate. The geopolitical landscape that provided Singapore with the opportunity to grow and thrive in the last five decades has changed, due to tensions amongst the major powers. He highlighted that Singapore has to avoid being between the conflicts of major powers.
“We must avoid being caught between the conflicts of major powers or be stranded in a fragmenting world of trade relations and technological standards,” he added.
The global landscape has changed irrevocably, with global companies reorganising their production and supply chains. Some companies are also reviewing the need for regional hubs and the way their operations are organised to serve different markets. New investments will be making its way to Singapore, but some existing ones may seek to diversify elsewhere.
Mr Chan also added that “It is a fluid landscape and we must do everything we can to defend our capabilities and capacities.”
The nature of jobs has also changed, with remote working becoming the norm, allowing for more global job opportunities to be available for Singaporeans. Still, the nature of remote working will also let other workers in other countries do the same jobs from their homes. Some job posts have advertised openings with the opportunity to work in Singapore or remotely, which affects many PMET jobs, as such work can be done virtually or through automation and AI.
Changes in the economy will also result in more societal frictions and tensions, as those who have more and those with less will contend, and issues such as foreign and local employment, and citizenship, will also arise.
“We will need to better take care of those affected by job and business losses. We have and will continue to do these in a sustainable way that is not divisive, affirm the dignity of work and strengthen our social fabric. These tensions, unless well managed, can divide our society,” he said.
The way forward for Singapore is muddled, but staying still is not an option. The fluidity of the entire situation means that every factor and circumstance is fast evolving. However, the government regularly update the people on the economy and job situation, sector by sector.
Three principles were outlined for Singapore’s moving forward.
Firstly, the country will open for business safely and sustainably. Mr Chan said that “it will not be a binary option of open or close. It can be done. We must stay open while isolating the impacted clusters quickly and tightly.”
Secondly, the government will extend help to businesses and workers, helping them adapt to the new normal. Firms with opportunities will be provided with a boost for growth, as this creates more job opportunities for workers. Examples of such firms include those in info-communications technology, biopharma, supply chains, and precision engineering. Companies experiencing a drop in demand now but have the potential to recover will have their core capabilities preserved so that they can come out of this stronger. Companies will also receive help in cash-flow, from schemes such as Jobs Support Scheme to rental relief scheme. Assistance is extended to companies whose industries have gone in another direction due to reinvention and adaptation.
The last principle includes supporting businesses through establishing the “right macro conditions,”, Mr Chan said. The government will strengthen connections with the world for markets, supplies, technology and talent, to preserve Singapore’s competitiveness.
In a novel move, Singapore will engage in digital free trade agreements to open more markets for businesses, while maintaining existing access to conventional markets.
The future may be unpredictable, and it may be challenging to pull through. However, the minister assured that the government is still committed to every Singaporean, mentioning that instead of waiting for the situation to calm down, they will start preparations now.