Budget Expected To Remove Some Pandemic Measures, But Remain Supportive

Singapore is to release its 2021 budget statement during today's session. The government enacted broad fiscal stimulus, around 15% of GDP, to mitigate the effects of the pandemic on the economy. Recent data has shown GDP and the labour market are improving, but this only justifies the removal of some support the economy still needing support.

• Government proposals are expected to focus on struggling sectors such as tourism or aviation, or companies seeking to invest in new technologies such as 5G. This could mean the impact of the measures are limited in terms of the stock market as they will neglect real estate and banks -- which dominate the benchmark.
• Citi Economics expects "a small fiscal deficit of 2% of GDP in FY21E (FY20E: 14.5% of GDP), with a negative fiscal impulse likely. Targeted measures could be rolled out to "smoothen" the policy cliff, with greater emphasis placed on job creation and economic restructuring."
• ING says "with elevated government spending, the budget deficit is here to stay in FY21-22. We forecast it to be equivalent to 4.3% of GDP."