Singapore’s high cost of living comes as no surprise. Consistently ranked as one of the least affordable cities to live in, the combination of pricey housing, car ownership, and increasingly, expensive healthcare and education has meant that an affordable way of life is almost impossible to come by.
As a trade-reliant economy, Singapore has not escaped the effects of the coronavirus crisis. Gross domestic product (GDP) dived by a record 41.2% in the three months ending June with sectors like construction and aviation grinding to a standstill, financial experts estimate that real GDP will not reach pre-COVID-19 levels until Q3 2021.
What does this mean for Singaporeans? A lot of financial stability. To put things in perspective, this year’s GoBear Financial Health Index gathered insights from over 1,000 Singaporeans to understand what they felt, thought, and were doing about their finances – and the findings are sobering. Find out how Singaporeans fared in Financial Literacy, Security, and Inclusion here.
Singapore (and Singaporeans) have always enjoyed the benefits of a stable economy. While neighbouring countries have battled currency devaluation, natural disasters and pandemics like the Avian Flu, Singapore has largely been unaffected. The COVID-19 pandemic has changed all of that, 48% of individuals surveyed now feel that Singapore’s current economic condition is unstable, as compared to the 32% in 2019.
Savings Taking a Dip
Saving and saving for retirement have also taken a hit.
70% of working adults say they do not have enough savings to sustain them beyond 6 months and 55% of respondents have reduced their savings to cope with the pandemic fall-out.
Both findings would not be worrying if the downturn is predicted to last for just a short period. However, with Singapore's jobless rate at the highest, it’s been in 10 years and retrenchments on the rise due to sector downturns, the economic outlook for many will be challenging.
| Related: The News Bearer: Singaporeans resilient in the face of Covid-19 |
Lack of Financial Savvy
What isn’t helping matters is many Singaporeans admit they’re not financially literate enough to make educated investment decisions. There is growing interest, however acquiring the knowledge fast will be tricky for some already juggling working from home, their children’s online learning and possibly a second job. While the global stock market presents some short term opportunities, its volatile nature and unpredictable rise and fall make it a risky investment. Safe haven investments like gold and government savings bonds also present issues: gold prices are currently at an all-time high, while the current issue of Singapore Savings Bonds is paying an interest return of just 0.24% for the first two years.
Covering all Bases
For many Singaporeans, up-skilling and growing one’s knowledge base will be a preferred way of taking charge of their future. To prepare for the tide of change that will come with automation and the growing digitalisation of businesses, 53% of Singaporeans have attended more online courses to reskill and upskill, and to source for more employment opportunities in light of the Singapore government’s commitment to preserve and create jobs in high growth industries. For some others, undertaking a second job has been an immediate stop-gap, 35% report that they have plans to secure a second job to pad their primary source of income. Cutting back has also been a popular financial management tool, 47% (vs 54% in 2019) of respondents now feel their cost of living is outpacing their spending, while 71% are already spending less on a day-to-day basis.
The Long Term Solution
While it doesn’t bode well that 53% of individuals surveyed are reportedly dipping into their emergency savings, and 19% - an increase from 11% in 2019 - are turning to government subsidies to provide needed financial assistance, a multi-tiered approach is required to deal with the long term disruption caused by COVID-19. However, as the country starts to ease restrictions and open itself up to less restricted international travel and trade, it will only be a matter of time before a new balance is achieved and a “new normal” created.