(April 7): Singapore unveiled around $1 billion in enhanced support measures to cushion households and businesses from higher energy costs triggered by the war in Iran.
The package presented on Tuesday in Parliament includes boosting the corporate income tax rebate announced in February to 50% from 40%, subject to a cap, as well as a $200 increase in a cost-of-living payment for eligible Singaporeans.
“We know the situation has amplified cost-of-living anxieties for Singaporeans,” said Acting Transport Minister Jeffrey Siow. “We do not know how long the conflict and its economic impact will last, but the government is alive to the situation.”
Singapore, which relies heavily on imported natural gas for power generation, is particularly vulnerable to swings in global energy markets, with recent disruptions adding to cost pressures. Prime Minister Lawrence Wong has announced the government is stepping up contingency planning, including convening a crisis ministerial committee to assess risks and ensure energy security.
Deputy Prime Minister Gan Kim Yong said earlier on Tuesday that economic growth will likely take a hit this year as the city state braces for higher inflation and electricity prices, while the country’s top diplomat separately warned markets have yet to factor in the worst-case scenario for a war in Iran that could still worsen.
“As a small and highly open economy, Singapore will not be able to insulate ourselves completely from this crisis,” Gan said. “Growth in the coming quarters is likely to be affected by the ongoing conflict.”
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Gan, who’s also the minister for trade and industry, said early data show that economic activity was resilient in the first quarter. His ministry will release advance estimates for gross domestic product on April 14 and update the economic outlook in May.
The island in February upgraded its economic forecast and expected gross domestic product to expand 2% to 4%, compared with an initial estimate of 1% to 3%.
Some parts of the economy will feel the effects more than others, Gan said. The most direct impact on the manufacturing sector will be those that rely on natural gas, crude oil and crude oil derivatives as feedstock, he said, adding that refineries have reduced their run rates and brought in shipments from sources outside of the Middle East.
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