COVID-19 and Singapore's Economy: Macroeconomic Impacts and Policy Responses

Abstract

This study investigates the macroeconomic consequences of the COVID-19 pandemic on Singapore, a small open economy vulnerable to global disruptions. The analysis begins by benchmarking Singapore's pre-pandemic economic performance, characterized by high GDP per capita, stable inflation, and low unemployment. A comparative framework is then established between the COVID-19 recession and the 2009 Global Financial Crisis (GFC), revealing the pandemic's amplified severity through simultaneous supply-chain disruptions and demand collapse. Utilizing IS-LM and AD-AS models, the paper evaluates Singapore's crisis response strategy, particularly expansionary monetary policies and targeted fiscal measures such as wage subsidies and sector-specific stimulus packages. Key findings highlight labor market adaptations, consumption volatility, and intervention efficacy. While proactive policies facilitated short-term recovery, the study underscores persistent challenges—including fiscal sustainability risks, overreliance on government aid, and structural labor market imbalances—that threaten long-term resilience. These insights contribute to the discourse on crisis management in trade-dependent economies.