Singapore is a small and open
economy, highly dependent on trade. Singapore is committed to keeping our
markets open, promoting competition and supporting businesses and workers
through the crisis. With changesintechnology,demandpatternsandsupplyconditionsinrecentyears,Singapore
has focused on accelerating our transformation into an innovation-led economy,
powered by technology, and ready to face the challenges of the future.
Singapore aims to position itself as a
Global-Asian o de of technology, innovation and enterprise, that is sustainable, resilient and inclusive.
the period under review, Singapore's trade policies focused on four
navigating the post-pandemic economic landscape
supporting and contributing to the global multilateral
enhancing regional and bilateral trade cooperation; and
(iv) promoting an inclusive and sustainable trade policy.
During the period, Singapore's macro economic policies were adjusted in view of
prevailing economic conditions. Specifically, for 2020, in response to the
COVID-19 pandemic, Singapore's monetary, financial, fiscal and regulatory
policies were eased to provide timely and targeted support. Singapore's fiscal policy was expansionary, focusing on targeted measures for macroeconomic
stability, economic growth, and redistribution to promote social equity, fiscal
sustainability and microeconomic efficiency. In 2020, fiscal policy was the most
expansionary on record for Singapore and played a key role in mitigating the
impact of the recession. Notably, in line with the pace and breadth of economic
recovery, policy focus shifted from broad emergency assistance to targeted
fiscal policies and financial relief to support post-pandemic priorities.
Singapore's exchange rate
centered monetary policy seeks to ensure price stability over themediumtermasabasisforsustainableeconomicgrowth.Monetarypolicysettingsbetween2016-20
were characterized by four distinct phases, in line with the changing
macroeconomic environment. In 2016-17, the MAS kept monetary policy
accommodative, via a zero per cent rate of appreciation
in the Singapore dollar nominal effective exchange rate (S$NEER) policy band in light of the subdued
outlook for growth and inflation. By early 2018, prospects for core inflation
had turned around, and upward pressures on inflation were building with the
emergence of a positive output gap. In turn, the MAS tightened monetary policy,
increasing the rate of appreciation of the S$NEER policy band
twice during the year. In October
2019, the MAS shifted to an eased monetary policy stance, through slight reduction in the slope of the S$NEER policy band. This was in view of the effects of US-China
trade tensions on global growth, and consequently domestic core inflation.
In Q12020, the S$NEER depreciated with in the then-prevailing policy band to a level slightly
below the mid-point. Subsequently in April 2020, the MAS set the S$NEER policy band on a zero per
cent appreciation path to prevent sharper drops in output, wages and prices.
This accommodative monetary policy stance complemented the strongly
expansionary fiscal policy. In keeping the S$NEER on a stable path, it also
helped to underpin confidence in the Singapore economy during the crisis. At
the same time, the MAS provided increased liquidity to the domestic financial
system through its money market operations. With core inflation expected to
remain well-below its