Monetary Authority of Singapore (MAS) report

The Monetary Authority of Singapore (MAS) is the central bank and financial regulatory authority of Singapore and meets twice annually to set the Singapore dollar nominal effective exchange rate (S$NEER) policy band. Unlike other countries like the UK, Australia, and India, where the interest rate is used as a means of monetary policy, Singapore’s monetary policy framework is focused on managing the Singapore dollar against a trade-weighted basket of currencies.

Following the latest meeting in October 2020, we surveyed two economists for their thoughts on the meeting, the upcoming transition to SORA, and the effectiveness of COVID-19 packages. We also surveyed 1,209 Singaporean adults to see what they think about the COVID-19 stimulus packages and whether or not the government spent enough on stimulus. So what was the consensus? Let’s unpack the stats.

Was the adoption of a 0% p.a. rate enough to stimulate the economy?

Following the MAS decision to set the policy band at 0%, there was discussion around whether this would be enough to stimulate the economy. Lim and Bhaskaran were split on what MAS should have done at the October 2020 meeting, with Lim calling for further easing and Bhaskaran saying holding the rate was the correct move, but both agreed that while the adoption of a 0% p.a. rate will not be sufficient, there was little else the MAS could do.

MAS decisions 2010-2020

When will the economy rebound?

The stimulus was designed to, among other things, help the economy rebound. But when that will happen is up in the air. Bhaskaran believes things could return to normal in the first half of 2021, but Lim is less optimistic, saying that things won’t rebound until the first half of 2022.

Has the Singaporean government released enough stimulus?

What do the experts think?

When asked whether the Singaporean Government spent nearly S$100 billion worth of stimulus and emergency relief measures proportionately, ESSEC Business School associate professor of economics Jamus Lim said that the size of the stimulus was appropriate but wasn’t sold on its effectiveness.

“The size of the stimulus was appropriate but the efficacy of the spend remains to be seen,” Lim said.

On the other side of the argument is CEO of Centennial Asia Advisors Manu Bhaskaran, who thinks those struggling in Singapore will need more help.

Much more support is needed for small enterprises and low-income workers,” Bhaskaran said.

What do Singaporean adults think?

It seems Singaporean adults are fairly evenly split on the need for more stimulus relief as well, according to a consumer survey from Finder of 1,209 Singaporean adults. Just under half of those who provided a response (49.77) say more help should be provided.

While the results overall show a fairly even division of opinion, the gap widens when we look at how Singaporeans responded by gender. In fact, far more men think that more stimulus is needed to stimulate the Singaporean economy than women, with 52.96% of men thinking that more funds are needed. Singaporean women are far more content, with only 42.71% believing that more funds are needed to prop up the economy.

Middle-aged Singaporeans are most likely to believe that more stimulus is needed, with 53.42% of those aged 45 to 54 and 52.81% of those aged 35 to 44 thinking more needs to be done to stimulate the economy. Those on either side of this group are the most satisfied with the current level of stimulus, with 54.39% of those aged 25 to 34 and 54.10% of those over the age of 55 saying there is enough stimulus.

Travel during the COVID-19 pandemic and its effect on Singapore

One of the industries most impacted by COVID-19 has been travel, which is especially hard for a country like Singapore since a large portion of those in the country are expats. And the reduction in talent from offshore will negatively impact Singapore, say both Lim and Bhaskaran.

One possible glimmer of hope was, in theory, the Hong Kong-Singapore travel bubble. However, both Bhaskaran and Lim saw this as only having a positive outcome from a tourism perspective. Lim went further to say:

Limited at the moment; the economies are mostly competitors. However, the tourism sector may enjoy a boost,” Lim said.

The transition to SORA

With April 2021 not too far ahead, we were curious to find out what this might mean for Singapore. Bhaskaran and Lim are both in favour of the transition, with Lim going on to say, “The transition to market rates away from a constrained benchmark has been less definitive than most market participants would have liked, in my view.”

• Methodology

  Methodology

  Economist survey: Finder surveyed Singaporean economists from 22 October to 2 December 2020.

  Consumer survey: Finder surveyed 1,209 Singaporean adults from 3 December to 14 December 2020 via Google surveys. Of these, 570 responded with “Prefer not to say”. The percentages on this page are calculated using the remaining 639 responses.

Image: Getty