3 / 15  BIS central bankers' speeches  On the domestic front, cost pressures from the labour market are expected to ease as firms pause their hiring plans and retrenchments rise. The property market has remained stable, thanks in part to the macroprudential measures in place and new temporary relief measures in response to COVID-19. The property cooling measures — progressively implemented over the last 10 years — have helped to temper price increases and bring prices more in line with underlying economic fundamentals. The stabilisation of the property market has substantially reduced its vulnerability to the COVID-19 shock. If property prices had been rising rapidly as we entered the COVID-19 crisis, we could have seen a sharp and painful correction. As it has turned out, the adjustment of the property market has been modest. Property prices have moderated in an orderly manner in recent months. At this point, there is no need to adjust the existing cooling measures. Instead, to help promote market stability, the government has provided temporary relief measures for buyers and property developers by extending regulatory and tax deadlines. These reliefs do not alter the existing cooling measures. MAS, together with the Ministry of Finance, the Ministry of National Development and the Urban Redevelopment Authority, will continue to watch the market closely to ensure that prices for private residential properties remain broadly in line with economic fundamentals. GOVERNMENT’S RESPONSE TO THE COVID-19 ECONOMIC CRISIS Fiscal policy has been the centrepiece of the government’s support for the economy.
Fiscal policies have supported jobs directly and buffered businesses and households from income shocks. Central banks eased monetary policies through interest rate cuts and financial asset purchases and provided sufficient liquidity for the smooth operation of financial markets. There is substantial uncertainty over the global economic outlook – largely because there is substantial uncertainty over the trajectory of the COVID-19 pandemic. If there are new waves of infection, it could lead to a return of containment measures that drag down economic activity again. Even if subsequent waves of infection are more limited, it is not clear if confidence in resuming normal economic activities will return fully. It is also not clear to what extent the destruction unleashed by the pandemic in the first half of this year has damaged the productive capacity of economies. The recovery will be uneven – across countries, across industries, and across time. 1 / 15  BIS central bankers' speeches  There is wide dispersion in projected growth rates across countries. Those countries that are more successful in containing COVID-19 and have put in place strong policy support are likely to stage stronger recoveries. China is expected to grow by about 1% this year, which would make it the only large economy to record an expansion. At the other end of the spectrum, the Eurozone is expected to contract by about 9% this year, weighed down by the significant disruptions caused by the high rates of infection; and the global trade slowdown. The outlook for the US is mixed.