Singapore’s economy and workforce facing ‘the perfect storm’; True scale of crisis impacts will be seen in 2H2021

Year: 2020

This post is written as a brief comment to rising job losses in Singapore due to COVID-19.

“As anticipated in our earlier related commentaries and economic series, the Singapore economy, and in particular its workforce is facing the ‘perfect storm’.

Job losses have reached 103,000; of which 73,000 are Singapore Residents. FMG projected 100,000 job losses amongst Singapore residents by end 2020 or 1Q2021, after factoring government interventions. The data is on track to support this forecast.

We also have repeatedly underscored the significance of structural unemployment and persistent underemployment. These numbers are the long tail risks of the crisis. The truth is that many of the jobs lost are not coming back. The economic structure will be permanently altered. Firm failures and technological substitution will result in fewer job vacancies even in the eventual recovery.

Previous recessions were sharp and short. This recession will be sharp and sustained followed by an anaemic recovery. The government cannot spend its way back to growth. The full effects of the crisis are dampened due to ‘shock absorbers’ from counter-cyclical measures.

The true scale of the impacts will be known only in 2H2021 when these measures wash out. We anticipate that liquidity abundance is disguising an underlying solvency crisis in a growing number of firms.”

– Devadas Krishnadas