Singapore is a large business and financial center that is tightly integrated with the global economic movement. Therefore, this country must prepare for a serious crisis that threatens public health, financial markets, and the global economy due to the pandemic era nowadays.

"This year Singapore is having a huge crisis in three areas, where the pandemic hits the public health, finance, and economics. Which will experience unexpected changes," Singapore Deputy Prime Minister Heng Swee Keat said in an interview with CNBC on Monday.

Heng said in his speech last week that Singapore was likely to experience the worst economic contraction since the country's independence after the official projection of economic growth this year was slashed by -0.5% and 1.5% to the range of -4.0% and -1.0%.

Depending on how the Covid-19 pandemic develops and policy responses around the world, Singapore's economic growth has the potential to shrink to minus 4 percent, the Singapore Monetary Authority of Singapore (MAS) said in its semiannual economic review report released Tuesday (28/4). 

Based on MAS's half-yearly report, as the Central Bank of Singapore, this year the Singapore economy will enter a recession. In addition, the severity of the economic impact of the pandemic era is still not significant. when the recovery steps can begin and when they end.

Recorded in history, by far the worst recession ever experienced by Singapore was during the Asian Financial Crisis in 1998. At that time the economy dropped to 2.2 percent. In 2009 Singapore experienced a global financial crisis. Economic growth at that time contracted by 0.1 percent. 

Gloomy Uncertainty Due To Pandemic Era

Singapore’s one of the countries in Southeast Asia who reported the earliest case of Covid-19. Singapore also the first one who release data on the economic performance of first-quarter last week. They give a glimpse of how corona has infected more than 200 countries that can hit the global economy.

Until now, Singapore has reported nearly 15,000 people have been confirmed infected with Covid-19, with only 14 people dead. Monetary Authority of Singapore (MAS) said in the second quarter the economy would likely contract more sharply. Given the level of intensity of the outbreak in their trading partner country. 
 
Singapore's response to corona patients is quickly isolated and traces those who have been in contact with patients. In addition, Singapore took more stringent steps such as closing borders, limiting the number of crowds, ordering its citizens to work at home, and limiting visitors in restaurants and other public places.

All workplaces and non-essential business activities have been closed. Residents are not allowed to leave the house except something important like buying groceries. Singapore's efforts have received appreciation from experts around the world including from the World Health Organization (WHO).

Unemployment tends to increase and wages go down and be a factor that contributes to core price deflation, MAS said. Furthermore, Singapore's monetary authorities said, it was still unclear whether Covid-19 could be muted globally in the second half of 2020.

As long as the vaccine hasn’t been found, the risk of the next wave of infection will remain high. But MAS said, despite the bleak outlook, Singapore hasn’t experienced significant capital outflows. Singapore’s currently extending its lockdown policy to June 1, which was previously scheduled to end on May 4. 

Timely Monetary and Fiscal Policy Reduce the Impact of Recession

According to the Monetary Authority of Singapore (MAS), so far there has been "timely and simultaneous support" in the form of monetary, financial, fiscal, and regulatory policies. These policies have succeeded in maintaining exchange rates at the right level to prevent widespread disinflationary pressures.
 
MAS also underlined that fiscal policy will play a leading role in efforts to reduce the impact of the recession. To date, the government has launched three policy packages valued at nearly 60 billion Singapore dollars in a nine-week period.
 
"Overall, the economic costs of the pandemic era can be mitigated by the timely and integrated support of monetary, financial, fiscal, and regulatory policies," the MAS semi-annual report said. These policies "will help prevent severe temporary shocks" and a deeper and longer economic crisis.