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SINGAPORE (BLOOMBERG) – Singapore’s central bank chief said that up to 20 percent of the city-state’s economy faces “deep scars” from the coronavirus pandemic.
The aviation and tourism industries are a concern, especially with an expected slow recovery in travel, said Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), at a virtual event hosted by the Institute of International Finance on Monday (October 12). . About 10 to 20 percent of the economy faces scars from the virus, he said.
“What’s going to happen to that industry when the planes haven’t flown, the pilots haven’t flown for months on a stretch?” Mr. Menon said. “It’s not like recovering after two months off. When you take two years off, it’s very different.”
Singapore’s trade-dependent economy, already in recession, is facing its worst contraction on record, of between 5% and 7% this year, according to official estimates. The government has allocated about $ 100 billion in stimulus to cushion the blow for businesses and help save jobs.
Menon said he is aware of the risks of prolonging support, but the key is to reduce the output without pulling the mat too suddenly. Singapore has yet to see the full scope of the crisis, he said, and more bad loans and bankruptcies are expected until the beginning of 2021. There is also the question of whether banks need to raise more capital.
“What I haven’t heard, and I think people are starting to talk, is whether it is necessary to raise new capital,” he said. “It’s not going to be easy at a time like this.”
Menon said that he has seen many positive changes in the digital economy and that there is a heightened awareness of sustainability that has aligned with MAS’s “biggest to-do list” on environmental, social and governance efforts, or ESG.
“In a funny way, the pandemic has made us all much more sensitive and aware of how vulnerable we are to the forces of nature,” he said.
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