It will boost business sentiment and consumer purchasing power.
The upcoming Budget 2017 should address the short term needs of businesses and firms if Singapore wants to boost household income and consumption, UOB economist Francis Tan urged.
In this regard, Tan noted how a fiscal stimulus in the form of enhanced tax reliefs will be useful. He said he it has been a year since the new Finance Minister Heng Swee Keat was on the job and the visible shift in the focus of Budget 2016 towards the “centre, from the left” was critical in supporting economic growth over the past few quarters.
"Unfortunately, due to the sluggish external economic environment, Singapore’s GDP for 2016 grew only 1.8%, the lowest annual growth rate since the global financial crisis in 2009. One would wonder if Singapore could have fallen into a technical recession had the government not change emphasis then and continued to focus on social spending," Tan explained.
And even though Singapore has largely dodged a technical recession in the past year, it has continually borne the burden of weaker global economic fundamentals, as well as sector-specific risks especially in offshore and marine sector.
"The rising wave of anti-globalisation rhetoric since UK’s EU referendum continues to bring about uncertainties even as the manufacturing sector had finally climbed out strongly from six consecutive quarters of on-year declines since 2Q 2016," he argued.
However, this has not stop down the slowing in the services sector, as the latter grew at the slowest pace since the 2009 financial crisis, with unemployment rate edging higher to 2.2% in 4Q16 - the highest since 2010.
"As such, we look forward to announcements of a single-year tax relief measure in Budget 2017 to tide businesses and households during this difficult period," Tan stressed.
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