Singapore’s GDP is expected to shrink between 4 and 7% this year, is this a good news for Bitcoin?

By Selena On May 27, 2020

It sounds strange, but Singapore is preparing for the worst recession ever. In particular, Singapore’s gross domestic product is expected to shrink between 4% and 7% this year, down from the previously projected range of a contraction between 1% and 4% due to severe stress from the COVID-19 pandemic. And the question now is also fundamental; how does Bitcoin play a role in Singapore’s economic decline?

Singapore will enter a recession this year.

The Ministry of Trade and Industry (MTI) said:

“The last time Singapore posted a full-year contraction was during the dotcom bust in 2001 when growth fell by 1.1%. Its worst recession thus far happened during the Asian financial crisis in 1998. The economy shrank by 2.2% then.”

The cut in GDP growth on Tuesday forecasts deeper into negative territory marking the third revision of the country’s policymakers in more than three months and following central bank warnings on last month on a worse-than-expected drop.

However, MTI also warns:

“Notwithstanding the downgrade, there continues to be a significant degree of uncertainty over the length and severity of the COVID-19 boom, as well as the trajectory of the economic recovery in both the global and Singapore economies.”

Also, there are other uncertainties such as the risk of the next major COVID-19 outbreaks in major economies such as the US and Eurozone that could disrupt economic activity in Singapore. In particular, if the COVID-19 epidemic begins to increase, the recession in these economies can be more severe and lasting than expected.

In addition, the growing awareness of the fiscal and monetary policy space that has diminished in many significant economies may jeopardize the government’s ability to cope with shocks. This will weaken the risk appetite and accelerate further financial market volatility, with negative spillover for the broader global economy.

Against this backdrop, MTI said the outlook for the Singapore economy had weakened further since its last assessment in March. Outward-oriented sectors, such as manufacturing and wholesale trade, will be adversely affected by the sharper-than-expected slowdown in many of Singapore’s key markets, as well as more prolonged supply chain disruptions.

Will economic recovery lean on Bitcoin?

As AZCoin News reported, both individuals and corporates who hold BTC or other digital assets as a long-term investment are not taxed in Singapore – simply because capital gains tax does not exist in the city-state itself.

However, enterprises based in Singapore are liable to income tax, should they be involved in cryptocurrency trading as a core business. Those that opt for bitcoin as payment for services rendered, or revenue, are subject to normal income tax rules. Companies are taxed on the profit generated within Singapore.

As Bitcoin and cryptocurrency are relatively new, governments around the world are still trying to fully comprehend their capabilities and use cases. Several crypto-asset projects have popped up all over the world, giving the illusion of a truly global crypto-asset revolution. However, if we take a closer look, these companies are usually registered in one of a handful of countries such as Singapore, Hong Kong,…

Source: Coin.dance

Of course, there are many other countries like Japan, Switzerland, Malta, and regions like the Cayman Islands and Gibraltar. However, why does AZCoin News pay special attention to these two countries?

As AZCoin News reported, the unstable political situation in Hong Kong has led many people to think that Hong Kong people will look to Bitcoin as a safe haven asset. This is similar to Singapore.

Cryptocurrency often comes to countries and regions which have a clear regulatory environment that allows crypto or blockchain companies to operate, or they allow these companies to register without any questions asked. And this fits perfectly with Singapore.

Earlier this year, Singapore made global headlines when the island-nation introduced new payments legislation, the Payment Services Act, offering global crypto firms a chance to expand their operations by applying for operating licenses in Singapore.

Source: Coinatmradar

Even as Singapore works to contain the virus, the Monetary Authority of Singapore (MAS) recently announced regulatory relief for Digital Asset Exchanges in the city-state. This continued acceleration towards a regulated, decentralized solution shows us that Singapore has a desire to stay ahead of the curve, maybe even more so as it becomes apparent that we might continue facing an economic crisis.

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