2/2  BIS - Central bankers' speeches
Markets might then react by driving up long-term interest rates. The premature tightening of financial conditions could then trigger increased volatility in financial markets, especially in economies that have yet to emerge from the pandemic and those with higher fiscal or external funding needs. In sum, while the global economy is in a much better place compared to last year, uncertainty remains as elevated. What has changed is the nature of the uncertainty. Last year, we were uncertain how far down the economy will go, in the face of an unprecedented pandemic. This year, the uncertainty is in both directions: a much stronger recovery or a much 2/9  BIS central bankers' speeches  dampened one. SINGAPORE ECONOMY The Singapore economy had recouped in the first quarter of 2021 the aggregate output loss incurred during the pandemic. The recent tightening of domestic restrictions and border controls will cause a near-term setback to segments that make up about 8% of the economy. The consumer-facing industries (retail trade, food & beverage, and land transport services) will be most affected by the tightening measures. The travel-related industries (air transport, accommodation, arts, entertainment & recreation) are likely to see further delay in their recovery. Construction and marine & offshore engineering activity may be hindered by labour shortages from the border restrictions on the entry of foreign workers. But the economic impact of the current restrictions will be significantly less severe than during the circuit-breaker last year. The majority of businesses remain in operation.