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Singapore’s Covid-19 Christmas economics

Compensating for downturns in trade and tourism, the government has cushioned many in Singapore from the impact of the economic crisis

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Kuala Lampur, Dec. 27 — There’s no snow. No real sleigh bells. And no one’s roasting anything by an open fire but this weekend celebrated Christmas like never before.

Instead of big parties and Christmas fairs, we had smaller events and households hosting smaller groups.

Around 20 per cent of the population identifies as Christian and many more Singaporeans celebrate simply because is the principal commercial festival of our time and a national public holiday.

So regardless of one’s , people feel happy to pick up gifts, throw parties and generally be merry as we broadly get ready to usher out one year and see in the next.

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Of course, 2020 has been a year that most would be happy to see off and so perhaps for that reason, festivities have been quite intense. Because of the social distancing regulations people are hosting (small) gatherings in their homes while splurging on their nearest and dearest.

This is evident from the literally empty shelves at many supermarkets. Almost every kind of festive baked item – mince pies, panettone and stollen – was in short supply the week before Christmas.

Trying to make a reservation at restaurants for Christmas eve was a nightmare and every hotel was full with people on staycation.

Initially I thought this was counter intuitive.

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With Covid-19 restrictions and a severe economic downturn, why was everyone buying up everything?

But then I realised that was exactly the reason.

Covid-19 means more Singaporeans are on the island over the festive period. Thousands of Singaporeans typically travel at this time of year were still at home. And given the restrictions and the general uncertainty, people were embracing festivities as an antidote to Covid-19 gloom.

In addition to what it tells about human , the apparent increase in festive purchases is also an indication of the purchasing of Singaporeans.

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It’s clear that despite an unprecedented economic contraction – the economy may lose more than six per cent of GDP this year –people, lots of people (not everyone) have considerable spending .

Which brings us to the Singapore ’s response to the crisis.

By bringing the disease under control and boosting spending to help compensate for downturns in trade and tourism, the government has cushioned many in Singapore from the impact of the economic crisis.

Through the Budget and various supplementary bills, the government has pledged close to S$100 billion (RM305 billion) to counter the economic impact of the .

I think the empty shelves and dearth of mince pies are testament to a successful economic intervention. As businesses receive grants and subsidies and the government co-pays salaries, Singaporeans continue to have their jobs and their spending power.

But how long can this last?

The government deficit is at an unprecedented 15 per cent and while Singapore’s fiscal strength means we can maintain the extra spending for some time, it can’t go on forever.

Even if the government could afford it, this sort of intervention will eventually cause inefficiencies in the economy. Propping up businesses that don’t deserve to be propped up and inflating salaries ultimately reduces competitiveness

So, as we wind up the year and look to , we need to ask what is next, when and how is the government going to unwind these schemes and return the nation to some sort of normality?

But for now, I wish everyone celebrating the end of this year: Happy holidays!

* This is the personal of the columnist.

For any query with respect to this article or any other content requirement, please contact Editor at contentservices@htlive.com

Copyright 2017 Online

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