The Monetary Authority of Singapore (MAS) said on Thursday that the economic condition of the city-state remains dire owing to the impact of the coronavirus pandemic. The economic recovery will be slow and uneven in Singapore, Ravi Menon, the director of the central bank, said.

The global economic outlook is shrouded in substantial uncertainty, the chief of the country's central bank told a news conference after the release of the regulatory body's annual report. According to data made available this week, the trade-reliant economy has fallen into a recession after contracting by 41.2 percent in the second quarter.

"The economic situation remains dire. The recovery is likely to be slow and uneven, weighed down by renewed outbreaks of infection here or abroad," Menon said.

A Record Slump

The MAS maintained its official GDP forecast in the range of -4 percent to -7 percent for 2020, keeping Singapore on track for its biggest-ever slump. The central bank eased its monetary policy in March, while the government has pumped in nearly S$100 billion ($72 billion) worth of stimulus and emergency relief measures to blunt the impact of the pandemic and lockdown measures.

Singapore
Singapore (Representational Picture) Wikimedia Commons

"The aim of monetary policy during this crisis is to prevent a broadening of disinflationary pressures that would be destabilizing for the economy," Menon said. Responding to a question on whether Singapore was seeing asset inflows due to the political uncertainty in Hong Kong, Menon reiterated that this was not significant.

"We've seen increased flows into Singapore from a variety of destinations and that includes Hong Kong but the amounts are not large. And if you look at Hong Kong's data, it'll also saw the same thing - there are no significant outflows," he said.

"There are more enquiries as you would expect when there is greater uncertainty in Hong Kong but actual fund flows are not very large. Flow of activity of businesses also is not significant," Menon said.

Beijing's Tightening Grip Over Hong Kong

China imposed a sweeping new security law in Hong Kong this month, adding to worries over the risk of a flight of capital and talent as Beijing tightens its grip on the financial hub. Menon also said the MAS is working with local economic agencies to discuss gradual repayment of relief measures by businesses and individuals and hoped to make an announcement around October.

"We want to avoid cliff effects" from a sudden withdrawal of that support, he said. Singapore has rolled out measures to help individuals and small businesses manage their cash flows and meet their financial obligations, such as loan repayments and insurance premiums.

(With inputs from agencies)