Singapore—Deputy Prime Minister Heng Swee Keat, who is also the country’s Finance Minister, said on October 17 that while he did not see a quick resolution to ongoing trade tensions between the United States and China, which has taken a toll on the global economy—including Singapore’s trade-reliant one—there is no need to take any “extraordinary measures.”
Speaking to members of the Singaporean media while on a state visit to Beijing, DPM Deng said,
“I do not see a need at this stage for any extraordinary measure.
Budget 2020 is coming up in a few months’ time and we will continue to monitor the state of the global economy, and there are many sectors in our economy that are still growing.”
In the meantime, such measures as the recent easing the country’s monetary policy for the first time in three years by slightly reducing the pace of appreciation of the Singapore dollar, was done to curb the effects of the current economic weakness.
What is important, DPM Heng said, is to “continue to focus on, is on structural policies,” he emphasised.
He added, “What I am hoping to do is to get businesses and business leaders to be much more involved in thinking about these issues and working together even as they compete with one another.”
It was reported on October 14 that Singapore had only narrowly missed a recession, since the economy showed a growth of 0.1 percent in the third quarter, following a contraction of 2.7 percent in the second quarter, one of the worst the country has seen in years.
Kumaran Pillai, publisher of The Independent Singapore, commented on DPM Heng’s remarks, writing on a Facebook post on October 24,
“DPM Heng said there is no need for extraordinary measures to counter a weak economy. I have a different view.
Our economy is flat-lining and we recorded a mere 0.1% growth in the last quarter. Some sectors of our economy have contracted and some of our PMETS have been displaced as a result. This is surely an area of concern for us. Another concern is the economic consequences of the trade war between China and the USA. Being a small economy, we are vulnerable to more economic shocks.
It also puzzles me as to why the government is hiking the transport fares at this juncture? A lot of people find it difficult to cope with the high cost of living and the stiff competition in the open job market.
Unemployment is also in the rise. Shouldn’t the government do more to strengthen local businesses? Seriously, they need to do more than the current lip service that they are doing right now.”
And now, the head of the country’s central bank, the Monetary Authority of Singapore (MAS), Managing Director Ravi Menon, is saying that it may be a few more quarters before the country experiences economic recovery.
Bloomberg reports Mr Menon as saying in an interview that “the current cycle should be bottoming out toward the end of the year and into next year,” assuming that the downturn remains contained in the trade and manufacturing industries.
Prime Minister Lee Hsien Loong has said that the country would be “lucky” to show positive economic growth for the year. In last week’s Forbes Global CEO Conference, PM Lee said,
“This year we’ll be well under 1%. If we’re lucky we should be above zero, but the momentum has substantially diminished. And a lot of it is lack of confidence — uncertainty.”
For this year, MAS expects growth of between 0 to 1 percent, followed by a modest improvement next year.
Mr Menon told Bloomberg, “It’s not going to be a robust recovery.”
And while the negative output gap, which is the estimated difference between the economy’s actual and potential performance, is not anticipated to get bigger, there are still risks that it could, the MAS head added.
He said that while the downturn is mainly seen in in trade and manufacturing industries, it “doesn’t mean it cannot spill over into other parts of the economy — it could very well do so. That is a risk that we’re seriously taking into account. But as of now, there are no signs of that.”
After Mr Menon made his remarks, the Straits Times Index saw it’s biggest gain in three weeks, an increase of 0.8 percent./ TISG
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