Hong Kong is catching up to Singapore in virus stimulus

Bloomberg

Hong Kong is catching up with global peers in its fiscal response to the coronavirus outbreak with the announcement of an “unprecedented” HK$137.5 billion ($17.7 billion) stimulus package focussed on avoiding mass job losses.
The fresh stimulus raises inevitable comparisons with spending measures unveiled by its geographic neighbour and
financial-hub rival Singapore, with the two governments among the first to confront the coronavirus threat before its wider spread beyond Asia. When it comes to total spending, Singapore remains ahead but Hong Kong is closing the gap, economists say. Singapore’s relief spending is equivalent to about 12% of gross domestic product, while the latest additions bring Hong Kong’s outlay to about 10% of GDP.
“All in all, it seems Singapore is being more proactive,” said Alicia Garcia Herrero, chief Asia Pacific economist with Natixis SA. One factor: Hong Kong appears to be moving more slowly in getting stimulus out the door and into the economy, particularly with its HK$10,000 cash handout not expected to materialise until the summer, she said. Singaporeans will start receiving cash from the handout programs as soon as this month, the government said.
Both are in good position to support their economies via ample reserves, while both are also particularly vulnerable due to reliance on exports, Tuuli McCully, the Singapore-based head of Asia Pacific economics at Scotiabank, said in an email.
In spending on job retention, the Hong Kong government’s job-security programme is offering wage subsidies for employees for six months at 50% of salary.
Singapore is offering employers between 25% and 75% subsidies on wages for nine months, capped at the first S$4,600 of a citizen or permanent resident’s monthly salary.
While fiscal measures in the two territories are “broadly similar,” Singapore faces a “larger risk of widespread retrenchments and bankruptcies” as it has instituted a one-month shutdown of non-essential services that covers about 30% of GDP, said Chua Hak Bin, a senior economist at Maybank Kim Eng Research Pte in Singapore.
By comparison, “Hong Kong has not resorted to such stricter measures, with restaurants
and retail still open, as the Covid spread has been better contained,” Chua said. Social gatherings of as many as four individuals are still allowed, and a narrower group of pubs, cinemas, gyms and other businesses have been shut.
Hong Kong has unveiled about HK$287.5 billion of direct virus-related aid following the announcement of Wednesday’s measures.
The HK$30 billion anti-epidemic fund announced in February included cash for hospitals and virus containment efforts, as well as subsidies for industries.
This year’s budget, announced February 26, included a HK$120 billion relief package centered on a HK$10,000 handout to Hong Kong permanent residents age 18 and older, but the money isn’t expected to arrive until the third quarter or later. That package came after the city slid into recession last year following months of anti-government protests.
Singapore’s total virus-related spending from three tranches of aid is close to S$60 billion ($41.8 billion).
Singapore was among the first governments in Asia-Pacific to unveil special stimulus to counter losses from the outbreak. It announced S$6.4 billion in direct medical-response efforts and support for households and businesses as part of its annual budget on February 18.