In a sober note in a recent Nikkei Asia interview, Prime Minister Lee Hsien Loong warned that inflation could become problematic all over the world unless certain measures are taken.
Noting the present high rate of inflation as well as the risk of recession, he told Nikkei Editor-in-Chief Tetsuya Iguchi that it was a necessary risk “because if you do not act against inflation that will become a very serious problem for the world.”
The interview, which was published on Monday (May 23), was held just before PM Lee appeared at Nikkei’s Future of Asia conference in Tokyo.
The Prime Minister spoke on a number of topics, including Russia’s invasion of Ukraine, with PM Lee calling the present global situation “very worrying.”
And when asked by Mr Iguchi whether he believed the current economic difficulty could be overcome, the Prime Minister simply answered, “Life will go on.”
He cited the example of Japan, which has experienced economic hardships over the past three decades, “And life goes on. Japan continues to exist.”
PM Lee also pointed out that because of stimulus measures, the economy worldwide recovered faster than expected from the blow it received due to the Covid-19 pandemic.
But this has not been without consequences, and the war in Ukraine has had an additional impact on the global economy.
“However, the stimulus measures continue to be applied very generously, I think for political reasons, even as the economy was already visibly recovering, in the US certainly, and also in Europe. And therefore, (this) has contributed to a spike in inflation even before Ukraine.”
Russia’s attack on Ukraine has made inflation worse due to disrupted energy supplies, as energy from Russia has been blocked from global markets.
Food supplies, especially grain, have also been affected.
Also on Monday, the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) said in a joint statement that Singapore’s core inflation had reached a 12-year high of 3.3 per cent.
“The increase was driven by higher inflation for food, retail & other goods, as well as electricity & gas,” the statement said.
Core inflation, which excludes accommodation and private transport costs, is now the highest it’s been since January 2012, when it was at 3.5 per cent.
In response to PM Lee’s remarks on inflation, some netizens suggested that the increase in Goods and Services Tax (GST) be postponed.
The GST tax hike from 7 to 9 per cent is set to be raised one percentage point each time on Jan 1, 2023, and Jan 1, 2024.
Other netizens expressed their concerns.
/TISG