SINGAPORE: The ongoing economic crisis caused by the COVID-19 pandemic is “deeper and likely to be more protracted” than past recessions, the Monetary Authority of Singapore said on Wednesday .
“At the same time, the shock will continue to propagate through the demand side of the economy as firms and households continue to be restrained by income loss and increased uncertainty, therefore holding back on investment and discretionary spending.” Even though green lanes and travel bubbles are being progressively rolled out, the revival of cross-border travel may be “hesitant” due to recurrent waves of infection and strict travel measures.
“On the demand side, it remains unclear whether the early rebound in the retail and F&B sectors from pent-up consumer demand can be sustained, as tourist arrivals will stay depressed and heightened economic uncertainty will continue to cap discretionary spending by households,” the central bank said.
The central bank also compared the characteristics of the COVID-19 crisis with past recessions across metrics such as production, expenditure and income. “Without wide-scale implementation of vaccination programmes in Singapore and globally, the threat of repeated outbreaks will continue to generate economic uncertainty, hampering a more decisive recovery,” the central bank’s report said.RESIDENT UNEMPLOYMENT TO STAY ELEVATED
“Substantial uncertainty” in the macroeconomic outlook for 2021 will also mean weaker than expected activity in many sectors, which together with further balance sheet strains, may constrain labour demand.