Singapore plans expansionary budget as growth pillars falter
Singapore said it will adopt an expansionary fiscal policy to boost growth, pledging support for companies that are facing labor constraints and an uneven global recovery.
The government will give bigger tax rebates and provide small and medium-sized companies with access to more than S$2 billion ($1.5 billion) of loans, Finance Minister Heng Swee Keat said in his first budget speech to Parliament on Thursday. It will defer levy increases for foreign workers in the marine sector, where rig builders are warning of more difficulties ahead amid low oil prices. Governments around the world are under pressure to ramp up fiscal support as some central banks resort to negative interest rates, and Singapore is among the most vulnerable in Asia to swings in global demand. Ructions in the world economy are coming at a time when cracks are showing in the island's traditional pillars of growth such as manufacturing and electronics, and as it faces an aging population.
"The need to restructure is both urgent and critical," Heng said. "Productivity has not been as strong as we would like" and "we must keep working on this," he said.