Today, Finance Minister Heng Swee Keat is expected to announce an expansionary budget for the 2019 fiscal year. Economists have
Today, Finance Minister Heng Swee Keat is expected to announce an expansionary budget for the 2019 fiscal year.
Economists have forecasted that Singapore’s budget deficit by April 2019 will be up to $5.08 billion—0.3 to 1.5% of the country’s GDP. Despite this, the country is expected to announce a “generous” budget—spending could increase from current levels of 18% of GDP to over 20%—ahead of elections that could be held as early as this year. PM Lee Hsien Loong is constitutionally obligated to hold elections by April 2021.
The motive for increasing fiscal spending and holding elections early would be to reassure voters and investors that the government is continuing to effectively manage the economy despite growth slowing from 3.9% in 2017 to 2.3% in 2018. On the business side of these worries, Singapore’s electronics industry (the largest contributor to Singapore’s 75.2% of its GDP that comes from services) fears a slowdown due to the continuing trade war between the US and China.
If significant budget increases are indeed made, expect elections this year. With an election in mind, anticipate these increases to go to courting the favour of voters by subsidising health care and other costs of living expenses.
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