Singaporeans will take some comfort in the fact that the Government is preparing a second stimulus package less than a month after the already expansionary Budget presented on Feb 18. Disclosing this during a discussion hosted by The Straits Times and The Business Times on Wednesday, Deputy Prime Minister and Finance Minister Heng Swee Keat noted that the Covid-19 outbreak has taken a turn for the worse. The outbreak has spread across the world, including to the largest economies and is now declared to be a pandemic by the World Health Organisation.

Even though draconian measures are being taken in attempts to control its spread – including a national lockdown in Italy – infections are still likely to be far from their peak. In Germany, Chancellor Angela Merkel has warned that up to 70 per cent of the population could get infected, while in the United States, reported cases could rise dramatically as testing facilities, thus far limited, are increased. The snowballing health crisis has been accompanied by a financial meltdown driven by both supply and demand-side shocks, as well as an oil price crash. The Singapore economy is likely to be severely impacted. A poll of 21 economists by the Monetary Authority of Singapore released a week ago indicated that gross domestic product growth will be 0.6 per cent this year, compared with a forecast of 1.5 per cent as recently as December, with respondents seeing a 30 per cent chance of economic contraction. Even these sobering forecasts may be too optimistic, as they do not take account of the recent accelerated spread of Covid-19 or the oil price crash over the weekend. Business sentiment for the second quarter of this year is also at an all-time low, according to the Singapore Commercial Credit Bureau’s latest Business Optimism Index study released on Tuesday.