The government of Singapore has announced an additional US$3.6 billion to support the economy as the city state sees coronavirus cases increase despite earlier signs that the virus seemed to have been contained.
The additional funds, which include a boost to cash handouts for all Singaporean adults, take the total fiscal response to just under US$42 billion. That accounts for around 12% of the $362 billion GDP which Singapore recorded in 2019.
The large fiscal stimulus from the Singaporean government will provide much needed income for thousands of workers and small businesses. The new measures announced today will increase the cash handout for every adult citizen to US$418 and also relieve business costs with a 75% wage subsidy for all firms on the first US$4600.
Singapore relies heavily on trade and has had a strong current account surplus for the last decade, contributing significantly to their GDP each year. With international trade taking a huge hit already, and no signs of abating as Covid-19 continues to wreak havoc around the world, it is predicted that the Singaporean economy is expected to contract by between 1-4% this year.
THINK LIKE AN ECONOMIST!
Q1. In the context of the article, what is meant by the term fiscal stimulus?
Q2. Explain how the Singaporean government is trying to protect workers and businesses.
Q3. Analyse the long-run impact of the large and unplanned increase in government spending on the Singaporean economy.
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