monetary policy easing

BNP Paribas warns however that a material increase in the use of such policies in EMs could see considerable currency weakness.

The Senior Minister is worried about prolonged expansionary policy and threats to emerging markets.

“GDP growth will eventually recover following the abrupt downshift in the level of activity, but there is significant uncertainty over the depth and duration of this recession,” says MAS.

Analysts at Morgan Stanley have issued a dire warning for the small and open city-state: A full-year GDP contraction is in the pipeline for the first time since 2001.

The critical need when economies suffer a shock like this is to ensure that the initial shock is not amplified and that there are sufficient shock absorbers in the system to mute the initial impact.

The currency dropped to a four-month low earlier this month after the MAS said there was room within its exchange-rate band to accommodate currency weakness to counter the economic fallout of the disease.

The way economists see it, the coronavirus outbreak is not unlike a kick in the knees for Singapore, which had been just about showing signs of regaining its footing.

(Oct 15): Singapore offers a small ray of light in a faltering global economy.

SINGAPORE (Oct 14): The Monetary Authority of Singapore (MAS) has eased the monetary policy “slightly” – the first easing in over three years – amid slowing economic growth.

(Oct 11): Singapore’s central bank will probably ease monetary policy for the first time in more than three years as a global slowdown continues to weigh on the export-reliant economy.