The central bank of Singapore has tightened its monetary policy. This is the first time the bank has changed its stance since 2016. The tightening comes at a time when the growth prospects are solid and the economy is expected to recover from the stagnation in recent years. Many economists had seen this coming. MAS or the Monetary Authority of Singapore relies on the exchange rate as the primary tool to determine changes in policy. The autonomous body held on to the zero percent slope for the currency band. It has now increased the same and has also posted a statement on the official website. The steepening of this slope has surprised some economists who were in favor of a neutral stance but there were just as many proponents of a tighter monetary policy.
The economy of Singapore is expected to expand through 2018 and for the next two years. It is no longer subjected to the slowdown witnessed in the last three years and global economic recovery is also poised to be much sturdier and reliable than in recent times. The Monetary Authority of Singapore is observing the growth in exports and expecting a substantial appreciation of the Singaporean dollar. The growth and expansion are not a given though. The trade dispute between the United States and China can spiral out of control and this will have a direct impact on all major economies around the world, including relatively robust economies such as that of Singapore.
In recent weeks, both China and the United States have tried to diffuse the increasing anxiety across free market economies. The government of China has publicly expressed its intent to keep off from a trade war. The Chinese don’t want protectionism and is willing to do what it can to avert a cold war mentality gripping trade and commerce with the United States. The US government is also keen to avert a major crisis but it is still unsure how it would try to balance its commitments to restore some balance in trade deficits while attending to the needs of an increasingly globalized market. Any major dispute between the two largest economies of the world will have a ripple effect. However, some economies may even prosper if the dealings go south. There are scopes for free trade agreements and increased trade with other countries, in the region and beyond.
Singapore has no major immediate concerns. The economy is in a sound state. The GDP has recovered and there is momentum in its growth. Inflation has been at healthy levels and would further trigger the recovery and possibly a short term boom. While growth has been confined to a few industries, 2018 could be a game changer. The expansionist budget that was announced earlier this year is also aimed at providing the boost necessary for recovering industries and those that witnessed serious slowdown to clock the growth that was recorded in the first few years of the decade. Economists continue to remain divided though if the tightening of monetary policy would have a positive turnaround. Some still prefer a neutral stand, at least for now.
About the Author
Morris Edwards is a content writer at CompanyRegistrationinSingapore.com.sg, he writes different topics like Top Digital Marketing Strategies for the Small Business, Wealth investments paying off for Singapores big three banks and all topics related to Business and Tech. For more info about Singapore Business Setup visit our website.
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