Singapore on Tuesday said it has set aside 5.6 billion Singapore dollars ($4.02 billion) in the coming year to help businesses and households tide through the ongoing coronavirus outbreak.
The Southeast Asian country has reported one of the highest numbers of coronavirus — now known as COVID-19 — infections outside China. As of Monday noon, Singapore has had 77 confirmed cases, 24 of which have been discharged, said its Ministry of Health.
"The outbreak will certainly impact our economy," said Heng Swee Keat, Singapore's deputy prime minister and finance minister, in his speech outlining the country's budget.
Economic measures that Heng announced include schemes to help companies retain workers, manage their wage bills and corporate tax rebates. There will be specific measures to help the five sectors most vulnerable to the virus outbreak, which are tourism, aviation, retail, food and point-to-point transports services.
The minister also announced another 800 million Singapore dollars to support the fight against the virus, with the bulk of of the funds going to the health ministry.
In addition, Heng said a planned increase in the goods and services tax will be pushed back given greater challenges facing the economy. The Singapore government had wanted to raise the GST from the current 7% to 9% between 2021 and 2025.
Those measures will contribute to an expected budget deficit of 10.9 billion Singapore dollars, about 2.1% of GDP, in the coming financial year from April 2020 to March 2021, Heng said.
The additional challenge that the coronavirus outbreak poses followed an economically difficult year for Singapore. The trade-dependent economy had to contend with the U.S.-China trade war and a slump in global demand for semiconductors — one of its main exports — in the past year.
On Monday, Singapore's Ministry of Trade and Industry downgraded its forecast range for the change in the country's annual gross domestic product to between -0.5% and 1.5%. That's worse than the earlier projections for growth between 0.5% and 2.5%.
In 2019, the Southeast Asian economy grew 0.7% — the slowest annual pace since 2009, according to official data.
"The recent virus outbreak has added salt to the wound," said Irvin Seah, senior economist at Singapore bank DBS.
He explained in a note earlier this month that the current outbreak could have a "deeper" impact on Singapore compared to the SARS epidemic in 2003. That's because the country has since increased its economic links with China, which is now Singapore's largest export market and biggest source of international tourists.