The city-state reopened early by Asian standards. This generated a boom and some challenges.
Defying gravity.
Daniel Mousse
For a small position so closely tied to the ebbs and flows of finance, it’s hard to see signs of a deteriorating global recession in Singapore. The city-state once again absorbs the hard work of foreigners, raising the unemployment rate to microscopic levels. The country’s airline is racking up profits and the home rental buildup is staggering. The global recession feels like it’s happening on some other planet. The question may not be so much whether Singapore’s economy has become a bubble, a loaded term implying a painful collapse, but how long the country can continue to defy gravity. Officials warned that the big adjustments in the world pose enormous challenges: the end of an era of decades of low inflation and interest rates, a preference for dominating supply chains and increasing rivalry between China and the United States. Disastrous things -in theory- for a republic that grew rich at the height of globalization and the expansion of the capital market. When and how it will catch up with Singapore is highly dependent on Covid and its legacies. Specifically, Singapore’s reopening advantage over its rivals. After a few false auroras, the city-state lifted almost all restrictions. Mandatory interior masking ended in August. Hardly a week goes by without Singapore hosting at least one major foreign conference. Hong Kong still struggles with testing regulations for travelers. The hidden system to the territory, added to the national security law imposed by Beijing, has caused an exodus. It is difficult to attend any business or social event in Singapore and not run into some who have fled. Japan has just opened up to visitors; Arriving in Tokyo for a business vacation last week was like landing at Changi Airport in Singapore in December. Lines of officials waited to check certificate and vaccination schedules before arriving at immigration counters in Narita, very few of which were staffed. Masks are still commonly worn indoors. (Japan had a culture of face coverings long before the pandemic. )
Singapore is building on its leadership. Gross domestic product increased particularly in the last quarter, the overall unemployment rate fell to 2% and inflation is 14-year-old. The central bank has tightened policy five times in just over a year and has linked its measures to deal with price spikes to rumors of deteriorating global conditions. “In the coming quarters, the slowdown in economic activity will intensify due to the synchronized tightening of financial policy globally,” the Monetary Authority of Singapore warned last month.