Singapore cuts official GDP growth forecast due to SARS

Asian Economic News, April 21, 2003

SINGAPORE, April 17 Kyodo

The Singapore government slashed Thursday its expectation for the country's economic growth this year to between 0.5% and 2.5% due to SARS, which has killed 15 people in the state and infected scores of others.

Deputy Prime Minister Lee Hsien Loong said at a news conference that the previous forecast for gross domestic product (GDP) of between 2% and 5% for this year, which was made before the outbreak of severe acute respiratory syndrome (SARS), no longer holds as SARS continues to wreak havoc in the tourism and transport sectors of the economy.

He unveiled a S$230 million (US$129 million) relief package to help businesses in the tourism and transport sectors, which have been hardest hit by the epidemic.

The city state, which has long been regarded as an enticing holiday destination in Southeast Asia with its reputation for being a clean and relatively safe city, has now almost become a ghost town through lack of tourists.

The government said visitor arrivals plunged 61% in April, hotel occupancy rates have fallen by up to 30% from 70% in the past and retailers said sales have dived 50%. However, the manufacturing sector has not been hit so far as most factories are still running as normal.

''It's a battle. It's a war and we are in battle,'' Lee said at a press conference, describing the serious threat posed by the SARS outbreak.

A statement from the Finance Ministry and the Trade and Industry Ministry said the relief package is ''not intended as a general stimulus package for the whole economy'' but rather as an ''immediate relief for the worst hit sectors, such as the tourism and transportation industries.

Lee said the government is monitoring developments and ''has the ability to do more'' if necessary.

The package includes a S$45 million set of relief measures for the airline industry, such as a 30% rebate on aircraft landing fees at Changi Airport and additional 10% rental rebates for all shop tenants at the airport from next month until the end of this year. The airport has been affected by cancellations and suspensions of flights by various airlines after the SARS outbreak while Singapore's national carrier Singapore Airlines has also been forced to suspend or cut flights due to weak demand for air travel, especially to the areas worst-hit by SARS.

The government also offered a 50% cut in port dues for cruise ships in a bid to help Singapore retain its attractiveness as a port of call for cruise lines at a time when the outbreak has forced some of the largest cruise operators to switch to other ports.

As for tourism-related industries, the government offered property tax rebates for commercial properties, with higher amounts reserved for some 100 of the biggest hotels, and also reduced by half the monthly levy hotels have to pay to the government for every unskilled foreign worker they hire.

Singapore's economy expanded by 2.2% last year after shrinking 2.4% in 2001 during the country's worst-ever economic recession.