Singapore rate decision tomorrow signals likely extent of trade war damage

(Apr 12): Singapore is about to send a signal on trade wars. As one of the world’s most open economies, the city-state is caught in US-China crossfire. A central bank policy decision on Friday will hint at how much damage rate-setters expect tariffs to inflict.

There are good domestic reasons for the Monetary Authority of Singapore, the central bank, to tighten policy. While manufacturing has been outpacing other sectors, growth in services is now picking up, as is employment. And the core inflation rate has slowly climbed to 1.7% from levels near zero in 2015.

But Singapore is uniquely vulnerable to a tit-for-tat tariff battle between China and the United States. Its prime minister, Lee Hsien Loong, said on Tuesday that a US-China trade war would be “catastrophic” for the world. It certainly would be for the city-state, which has faced outward for two centuries and is the world’s second-biggest container port, after Shanghai. The sum of its exports and imports is worth three times as much as its GDP, one of the highest ratios of any country, according to the World Bank.

---

Related Stories

• Banks in Singapore can withstand multiple shocks: MAS
• Changes in ICR, leverage to come into effect immediately, with additional disclosures in March
• MAS Financial Stability Review shows local banks can withstand multiple shocks

---