COVID-19 Measures Enabled Singapore to Mitigate Short-term Impact and Prevent Longer-term Economic Scarring17 Feb 2022
The Ministry of Finance (MOF) published an Occasional Paper titled “Assessment of the Impact of Key COVID-19 Budget Measures”. The paper assesses how Singapore’s COVID-19 measures mitigated the short-term impact of the COVID-19 crisis, and helped prevent potential longer-term economic scarring.
2. The paper builds on the interim report published in February 2021, and provides an assessment of the impact of Singapore's COVID-19 response on broader economic and social outcomes. A longer period of observation and collation of more detailed data have allowed for a deeper analysis of the fuller effects of the economic measures, as well as the opportunity for causal inference studies of the impact of specific schemes.
Near-Term Outcomes: Impact on the Macroeconomy and Health
3. The fiscal measures, coupled with supportive monetary policy, averted economic and job losses in 2020 and 2021. The Monetary Authority of Singapore (MAS) estimated that the Budget measures over 2020 and 2021, buttressed by accommodative monetary policy, supported Singapore’s real GDP growth by 6.6 percentage points and 0.8 percentage points in 2020 and 2021 respectively. Further, it is estimated that without fiscal and monetary policy support, the resident unemployment rate would have hit 6.1% in 2020 and 7.5% in 2021, 2 percentage points and 4 percentage points higher than the actual respective rates. These Budget measures kept businesses going and preserved jobs for local workers, helping more families and individuals through the crisis.
4. Singapore’s public health measures and concerted efforts to vaccinate a very high proportion of the population are estimated to have averted about 8,000 deaths due to COVID-19 between 1 August 2021 and 31 December 2021. At 15.7 per 100,000 population (as at 30 January 2022), Singapore’s COVID-19 mortality rate is among the lowest in the world.
Longer-Term Outcomes: Impact on Economic Scarring and Loss of Human Capital
5. The paper also provides a deeper analysis of how the key Budget measures, individually and collectively, worked effectively in achieving their objectives. Against comparable advanced economies, preliminary analysis shows that Singapore has:
a. Reduced the loss to potential output. With workers remaining in employment and businesses continuing to operate, the economy was able to bounce back when demand conditions improved and the public health situation permitted;
b. Experienced limited increases in corporate debt. In addition, unlike most Governments, Singapore was able to fund its large fiscal support package through past budget surpluses and a draw on Past Reserves;
c. Continued to expand resident employment, as workers were helped in retaining their capabilities and transiting into new jobs;
d. Maintained the job prospects of recent graduates from the various institutes of higher learning;
e. Minimised the loss of schooling hours by keeping schools physically open and ensuring digital access for home-based learning during the relatively short period of school closure; and
f. Mitigated the distributional impact of the pandemic across the population.
6. More than $28 billion was disbursed under the Jobs Support Scheme (JSS) from April 2020 to December 2021, which provided wage support for employers and helped them retain local employees during the pandemic. JSS is estimated to have saved 165,000 local jobs from March to December 2020, and helped support local wages.
7. Three Financing Schemes - Temporary Bridging Loan Programme (TBL), Enterprise Financing Scheme – Working Capital Loan and Enterprise Financing Scheme-Trade Loan – supported over 27,000 enterprises in accessing loans of over $24.7 billion over the period of March 2020 to December 2021, substantially higher than in 2019. The TBL, the main financing scheme, helped to alleviate financial distress across firms of all sizes and supported employment in smaller firms with 50 or fewer employees.
8. The SGUnited Jobs and Skills (SGUJS) Package provided local jobseekers with jobs and skills opportunities in the weakened labour market and boosted local hiring as the labour market started to recover. As at end-October 2021, more than 166,300 jobs and skills opportunities under the SGUJS initiatives were filled, with 122,300 (or over 70%) being job placements. The placements comprised a good mix of PMET and non-PMET roles, with more than seven in ten being long-term job roles. The Jobs Growth Incentive (JGI) incentivised the additional hiring of 47,000 more local workers. JGI also modestly increased the proportion of mature workers (aged 40 and above) hired and improved the average wages of new hires.
9. The COVID-19 Recovery Grant (CRG) provided targeted support to employees and self-employed persons who remained financially impacted by the pandemic. As of December 2021, the CRG has supported 27,500 workers.
Issued by Ministry of Finance
17 Feb 2022