## Singapore – Current Economic Developments

## Source details

**Canonical URL:** [Singapore – Current Economic Developments](https://www.imf.org/-/media/files/oap/oap-home/2020/sgp-jschmittmann-07302020.pdf)

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- [Markdown version](/-/media/files/oap/oap-home/2020/sgp-jschmittmann-07302020.pdf.md)
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### Macroeconomic overview
- Singapore initially contained COVID-19 successfully, but the virus spread in foreign worker dormitories beginning in April.
- The Singapore economy is going through its most severe downturn since Independence.
- In Q2, Singapore’s economy contracted -12.6% y/y and -41.2% q/q seasonally adjusted annualized (flash estimate).
- Inflation has turned negative.
- The unemployment rate rose in Q2.
- The property market has remained stable.

### Sectoral impacts
- Hardest hit: construction, travel-related, and customer-facing services (retail, F&B).
- Holding up well: other services such as finance and ICT.
- Manufacturing and exports held up well supported by electronics and pharma products.
- Prolonged sectoral issues and scarring are risks for tourism and retail.

### Policy response
- Fiscal response was swift and substantial.
- Monetary and financial policies focused on ensuring stability.
- The MAS-Fed swap line helped ease USD funding pressures.
- Policy focus areas include upskilling the workforce and incentives to automate and innovate, with emphasis on fintech and sustainable finance.

### Fiscal measures (percent of GDP)
- Fiscal measures above the line and below the line: numeric values reported in source (sequence preserved):
  - 1.5
  - 2.2
  - 3.1
  - 2.4
  - 1.1
  - 4.1
  - 8.2
  - 15.4
  - 8.8
  - 11.3
  - 21.3
  - 12.0
  - 3.2
  - 7.2
  - 4.9
  - 1.0
  - 9.7
  - 1.1
  - 0.1
  - 0.5
  - 3.6
  - 4.2
  - 1.8
  - 24.0
  - 4.2
  - 8.8
  - 1.9
  - 5.0

### Risks, uncertainties, and structural considerations
- Large uncertainty around pandemic evolution.
- Weaker external demand, global value chain reconfiguration, and geopolitical risks.
- Risk of higher inequality; Singapore has a track record of maintaining social mobility.
- High leverage among some firms could weigh on the recovery.
- Global financial conditions could abruptly tighten again.

### Strengths and opportunities
- Substantial fiscal policy buffers.
- Strong pre-COVID focus on raising productivity and turning Singapore into a global innovation hub through incentives to automate and innovate.
- Authorities doubling down on upskilling of the workforce.
- Focus on growth areas including fintech and sustainable finance.
- Singapore can draw on unique strengths in the post-COVID world.

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_Source: https://www.imf.org/-/media/files/oap/oap-home/2020/sgp-jschmittmann-07302020.pdf_