February 25, 2021

In “Looking to 2021: Prospects for the Singapore economy and jobs market”(NUS News), Dr Kelvin Seah (NUS Economics) discusses the downward trend of unemployment which has hit the global labour market, zooming in specifically on Singapore, and briefly outlines the factors determining whether this will persist.

Pointing out that Singapore hit an all-time high of 4.9% unemployment in October 2020, he warns citizens not to assume the worst is over just because the unemployment rate had fallen from October 2020 to November 2020, and financial forecasters predicted Singapore’s Gross Domestic Product (GDP) would recover in 2021.

Dr Seah further elaborates that sustained economic recovery was not solely dependent on internal economic indicators, but external ones as well. These would include global events outside of Singapore’s control, such as political or even social factors. Due to Singapore’s high reliance on foreign trade and investments, repeated waves of COVID-19 infections in other countries would continue exerting downward pressure on economic activity. Three major externally-dependent factors highlighted by Dr Seah were aviation, tourism, and the hospitality industries.

He continues by stating that policymakers face two major challenges in mitigating the effects of COVID-19: misinformation and fiscal prudence. With the increasing influx of information across social media, Dr Seah observes that citizens, especially seniors, were wont to believe that vaccines had undesirable effects such as changes to DNA, which discouraged them from getting vaccinated. Should this persist across the population, Singapore’s herd immunity to COVID-19 would subsequently be reduced, which would in turn cause the economic downturn to persist.

Secondly, he observes that Singapore had promptly introduced financial support such as the Jobs Support Scheme (JSS) to help individuals and companies who had been badly hit to sustain their businesses and income. Though the measures were successful in remedying some effects of the pandemic, Dr Seah says this cannot be sustained, and acuity on the part of the government to know when to cease financial support would be crucial for the country as well.

Dr Seah expects that the  budget for 2021 will likely focus on assisting companies to grow in innovation capacity, so as to strengthen their ability to innovate even in the face of financial challenges and setbacks to the economy.

Read the article here.