Manufacturing in particular was supported by a surge in the production of pharmaceutical ingredients and biological products. The electronics industry also did better than expected. The modern services cluster – comprising financial, ICT, and professional services – was also less affected. The financial services sector in particular has done reasonably well in the face of the pandemic. I will touch on this later in my remarks. All in, the Singapore economy will experience a full-year contraction in 2020, with GDP growth projected at –7 to –4%. The 12% of the economy that is worst-hit—construction, travel-related, and consumerfacing domestic services—will take time to recover. While we may see strong positive sequential growth in the second half of this year for those activities, it will not be sufficient to restore activity to pre-crisis levels. The performance of the trade-related sector will be dampened by weak external demand and continued small frictions in global supply chains, but headline manufacturing output is likely to be supported by strong demand for pharmaceutical products. Growth in modern services, on the other hand, is likely to moderate in the second half alongside the pullback in business activity. Both Core Inflation and CPI-All Items inflation are expected to turn negative, averaging between −1 and 0% this year. External inflation and global oil prices will remain low, notwithstanding some upward pressure on imported food prices due to supply disruptions.
To support banks’ capacity to lend, MAS has implemented transitional measures till endSeptember 2021: Allowing banks to recognise 100% of regulatory loss allowance reserves as Tier 2 capital; and Reducing from 50% to 25% the amount of stable funding that banks must maintain on loans to individuals and businesses maturing in less than six months. MAS also provided guidance to financial institutions on estimating their loan loss allowances in the context of COVID-19: That in assessing COVID-19’s impact on future economic conditions, financial institutions should consider the government’s support measures in bolstering economic resilience; and That financial institutions need not maintain higher loan loss allowances solely because 8 / 15  BIS central bankers' speeches  COVID-19 relief measures were applied to certain loans. MAS provided room for insurance companies to rebalance their investment portfolios in the face of uncertainties in financial markets: By extending to end-2021 the transitional measure in the calculation of their financial resources under RBC 2. OPERATIONAL RESILIENCE OF FINANCIAL INSTITUTIONS  The financial sector has been operationally resilient, functioning with minimal disruption in the face of COVID-19. The financial industry has maintained a high level of customer service throughout the Circuit Breaker period, as well as Phases One and Two of the re-opening. They have also continued to seamlessly conduct their wholesale and international businesses. The industry’s operational resilience reflects sound business continuity planning and agile adjustments to work processes.