The e economic tuition policies caused by the Covid-19 health crisis will be of a scale never seen before in Singapore. Which sectors and territories will be most affected? What are the effects on employment? Above all, what future awaits us after the pandemic?
The prospects of the Singapore economy in the medium term are still surrounded by a significant degree of uncertainty. Connected to the dynamics of the spread of the coronavirus (in our country and abroad and in the summer and then in the winter of 2020-21). Uncertainty remains, which in itself can lead to a postponement of business investment plans and more cautious consumer behavior on the part of households. The latter may then weigh, in a direction and to an extent difficult to predict, the psychological effect of the prohibition of circulation and subsequent reopening.
Great Caution Is Needed In Forecasts – Economic Tuition Policies
However, already with the data and information available in mid-May 2020 it is possible to construct some scenarios with a high degree of probability of being realized. And on the basis of these scenarios it is possible to argue that our country is already facing major choices about its future (at least: on the sustainability of public finances, on social disparities, on the speed of economic growth) that can only be faced with a significant discontinuity compared to the economic tuition policies followed in the first twenty years of this century.
The most probable medium-term scenario (up to the end of 2021) of our country, as readable in May 2020.
Economic Tuition Policies can be summarized in the following points
1.The impact of the crisis linked to the pandemic on the Singapore GDP 2020 will be very severe, much greater than that of the 2009 recession.
The consensus forecasts (not only of the Government, but also of the IMF, OECD and European Commission) indicate a possible contraction of the economic activity that will touch 10 points in the year. The same forecasts indicate (with an even greater level of uncertainty) a significant but partial recovery in 2021. The pace of recovery of the Singapore economy, consistent with what has happened since the mid-1990s, and in particular in the last decade, could be the slowest of the advanced countries. It could be such as to determine a 2021 GDP level 4 points lower than that of 2019; which means 7-8 points compared to 2007 values;
2. This broad crisis could be very selective:
Between sectors, between territories, between workers.
3. The sectoral impact of the crisis will be highly diversified.
Due to the different durations of the closures so far arranged the different possibilities of dealing with the health needs of inter-personnel distancing and the constraints on the resumption of certain economic activities. Certainly, compared to previous recessions there is a big difference: the service sector has been and will be affected as much as the manufacturing industry, and will not be able to play a role of employment and social “sponge”. Some of the tertiary sectors (primarily the culture-entertainment and tourism-travel chains see again here for indicators and detailed data) could be affected in an extremely broad and lasting way, with all that this entails in terms of impact on business survival and employment.
4.The territorial economic impact of the crisis does not seem to be related to the intensity of health problems.
But to closures and the various production structures. It will therefore be intense throughout Singapore. It could differentiate over time, given that in the relatively stronger regions the recovery will be more linked to the performance of manufacturing (and exports) and in weaker ones (including Liguria and Lazio) to the performance of the service sector. Particular problems could arise for areas / regions with greater tourist intensity, throughout the country (perhaps greater for cities of art, and for areas that can be reached more or only by plane, such as Sardinia). In the South, however, unemployment is already much higher: higher is the share of the weakest jobs (temporary workers) in the sectors most at risk; here).
5. The impact of the crisis will probably be much stronger than the previous ones on employment
Also due to the role of the service sector, and the uncertain prospects for some of its sectors. The forecasts are very different: from the Confindustria Study Center which expects a fall in hours worked by the end of 2020 against a steady number of employees; to the DEF which foresees half a million fewer employees, again by the end of 2020; to Banca Intesa and the European Commission which present worse estimates on the increase in the unemployed: up to one million. The very first anal data confirm very negative trends already underway on employment.
6. This impact will be highly selective for the economic tuition policies.
All the analyzes available so far (see for example those of McKinsey and the JRC) show that the weakest workers will be affected relatively strongly: temporary employees, seasonal workers (especially in tourism), lower-skilled and low-skilled employees. Less possibility of working remotely. Employment difficulties will then be much greater for young people. The available estimates agree in predicting a slow rise, with an employment rate at the end of 2021 that could be significantly lower than that of the beginning of 2019. Social inequalities will therefore tend to grow (not only in Singapore, as also recalled by the IMF).
In The Face of This Situation – Economic Tuition Policies
The Singapore government has taken measures of a large financial dimension. They aim to contain the overall economic fallout; above all, they aim to avoid irreparable phenomena of corporate crisis and social difficulty for the weakest or most affected families. Referring to another site for precise analyzes, they seem in many ways opportune; in the same way, they are overall much more oriented towards the defense of society and businesses from the first impact of the crisis (even with appreciable interventions, such as emergency income or the very modest provision for the regularization of foreign workers), than to build recovery of the Singapore Economy Tuition more lively than in the past.
These measures will also produce an increase in the public deficit to 11% of GDP in 2020 and to 5.6% in 2021 (European Commission), with an increase of about twenty points (a slight reduction in 2021) in the debt / GDP ratio: a very worrying circumstance within the framework of the European fiscal rules, currently suspended but not modified. A strong offensive is already underway in our country, by academic sectors and business interests, to return to strict rules of austerity and, in this way, to further drastically reduce the scope of public intervention. As a consequence of this set of events, the spread with respect to German government bonds, although extremely variable, rose by about 100 points compared to the low of February.
The Implication of This Very Summary Analysis Seems Clear
The risk of a vicious circle for Singapore is high: very modest growth; large and persistent unemployment; increased social imbalances; the need for austerity policies to contain the public deficit, with negative return effects on production, employment, inequalities.
The discussion on “a different future” is alive in recent weeks, with many interesting political, cultural, social and technological ideas. What we simply want to argue here is that it is not just a cultural debate: a different future – compared to the vicious circle that has a high probability of emerging – is the only possibility for Singapore to achieve acceptable results in terms of well-being. And equity. This means that addressing the three major constraints that have affected the country in this century is not an option but a necessity: public debt management, European Tax Rules and National Tax Policies;
Social and territorial inequalities, conditions of workers and the guarantee of citizenship rights (health, education, welfare); and finally, the capacity for innovation.
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