By Ronnie Harui
Singapore is facing its most severe recession ever, due to the shock to supply and demand caused by the Covid-19 pandemic, said Ravi Menon, managing director of the Monetary Authority of Singapore.
The country's gross domestic product for this year is forecast to contract between 7% and 4%, Mr. Menon said in a transcript of a podcast with Tim Adams, president and chief executive officer of Institute of International Finance, on May 28. MAS released the transcript on Thursday.
The MAS's role is mostly aimed at supporting fiscal policy, by easing monetary policy, ensuring smooth functioning of the funding markets and facilitating the flow of credit to the real economy, Mr. Menon said.
On the monetary policy front, the MAS eased the Singapore dollar's rate of appreciation to zero percent, starting at a lower prevailing level of the exchange rate in March, he said. Hence, the exchange rate is at a lower level against a trade-weighted basket of currencies and has been kept stable. This is an accommodative and supportive policy stance, Mr. Menon said.
One of the risks that MAS is quite concerned about is renewed capital outflows from emerging market economies. "They remain vulnerable if there is a round of secondary waves of infections," Mr. Menon said.
Another risk is increased deterioration in credit quality, he said; "There's going to be ratings downgrades."
Write to Ronnie Harui at ronnie.harui@wsj.com
