The novel coronavirus has effectively turned the world on its head. Every individual and every business and institutions from each and every sector found had their respective daily lifestyles and operations disrupted. The direness snowballed as the months went by, with over 19 million people have been infected to-date. To stop this number from increasing even further, many governments have issued out containment measures to such as lockdowns and the cessation of physical operations of businesses to limit the movement of people.
Slowly but surely, what started as a health scare quickly turned into an economic threat. In fact, the International Monetary Fund (IMF) has quickly revised for global growth downwards – projecting the economy to contract by 3 percent as opposed to a 3.3 percent growth projected earlier.
That’s on a global scale, but what about in the Singapore context?
How Singapore Tackled COVID19 During Its First Arrival
One of the first measures the government implemented was to tighten the border controls to prevent any importation of cases. Secondly, the government had pushed forward a progressively stricter safe distancing measures, from maintaining safe distancing to the cessation of physical operations of the business. This was done to limit the community cases of COVID19.
These were measures that were excellent in safeguarding the health of the public, but its effect on the economy is undoubtedly one of concern. The global travel restrictions have caused a significant drop in tourism and the circuit breaker measures have effectively dampened domestic economic activity and led to deeper cutbacks in consumption.
The Economic Impact Of COVID19
To say that Singapore’s economy is affected by the global pandemic is an understatement. According to MIT’s Singapore News Economic Sentiments (SNES) the daily SNES has declined from 0.42 on 23rd January (the day the first COVID19 case was reported) to 0.27 by the end of the month. The sentiments saw a gradual increase as the government and citizens work their way through the earlier stage of the pandemic – that was till Saudi Arabia and Russia declared an oil price war and the World Health Organisation had declared the health scare as a global pandemic. And almost immediately, the sentiments plunged, reaching 0.15 by 17th March.
The Sectors That Were Heavily Impacted
Retail and Food & Beverages (F&B): The reduction in domestic consumption and travel has had a direct impact on front-facing sectors, particularly the Retail and F&B industries. Due to the health anxiety and Circuit Breaker measures, caused a significant drop in mobility. With more people preferring to spend their time at home, the Department of Statistics saw a rapid decline of F&B Sales Index and Retail Sales Index, registering declines of 23.6 percent and 14.1 respectively in March.
That said, this doesn’t apply to all areas. The sales at the grocery outlets and online sales have fared well during the pandemic. For instance, online retail sales had easily shot up by 40 percent year-on-year in February and March.
Moving forward, this upward trend for online sales and services is projected to continue, simply because there is a significant shift in consumer behaviour and consumption trend. Following this, businesses from all sectors are also shifting their operations online and adopting various digital solutions to ensure an excellent customer experience.
Outward-Oriented Sectors: Outward-oriented sectors are simply industries that depend on external demand and supply chains, such as wholesale trade and manufacturing. On top of the worsening business sentiments, the weakening of the demand and supply chains is further exacerbated by the internal instability of each nation, there has been a significant drop in new orders. Sentiment-sensitive industries, for instance, the finance and insurance sectors, have experienced greater vitality. The air and sea cargo has also seen a sharp decline due to the disruption in our weak global demand and supply chain.
Domestically-Oriented Sectors: Seeing as how the Singapore economy heavily relies on the external economy and trade, our domestically-oriented sectors such as real estate, are susceptible to the negative spillovers from the outward-oriented sectors. Furthermore, with the weakening sentiments and slowdown of domestic economic activity, the impact is mostly negative.
Domestically, Singapore’s economic performance will largely be dependent on our ability to resume economic activities safely and without a resurgence of COVID19 cases. Thus, businesses must practise safe management practices, with the ideal being to continue working remotely to the maximum extent possible.
Let us help you maintain your business operations with our virtual offices. You’d be able to save office rental costs by opting out of a physical location and you’d be able to allocate your resources to areas that you think that will need the most. You’d be able to take one step further to recovery.