We now expect the economy to grow between 0.5-1% this year. But we believe that in the short-term recovery will still be less vigorous, compared to previous cycles. This reflects the continuing restructuring in the Singapore economy, particularly in low-end manufacturing. However, both the manufacturing and services sectors appear poised to ride the recovery and next year we expect GDP growth to pick up to 3-5%. 1  Source: Asian Development Bank. 2  The Business Times, 30 Oct 2003 “KL’s growth will average 6% in 2004-05: Mahathir”. 3  The Business Times, 24 Oct 2003 “Global economy bouncing back, says IMF”. 4  The Business Times, 5 Sep 2003 “East Asia will be fastest with 6.1% growth in 2003”. In the financial services sector, stock market activity reached record levels, with fund management and corporate finance activity also growing strongly. Following several negative quarters, the financial sector started growing again in the second and third quarters. As a result, growth in the first three quarters of this year averaged about 2.5%. The sector should register moderate growth for the rest of the year, and strengthen further into 2004. Prospects for Singapore’s financial centre What does the improved economic and financial outlook mean for Singapore’s financial sector? Back in 1998, when the Financial Sector Review Group was developing strategies for growing the financial sector, we thought that Singapore could become an international financial centre for certain activities, like London. For example, we were already the fourth largest FX centre in the world.
But when ambitious reform programmes are adopted and implemented, that is what happens! These countries are on the road to recovery. The markets have been quite calm so far. But what if the situation worsens? Their reaction also shows the resilience of the euro area to external shocks. The safety nets that have been put in place in recent years are playing their part. I’m referring to the European Stability Mechanism (ESM), the banking union and the different European Central Bank programmes. But we must be vigilant. The ECB clearly stated on Sunday that it was monitoring economic and market developments closely. Should risks arise, we are ready to use the instruments we have at our disposal – quantitative easing and the OMT programme – and we are even ready to use new instruments within our mandate. What could these new instruments be? The Governing Council of the ECB is monitoring the situation in real time. We have already said that we are ready to do more in terms of monetary policy, if necessary. Until now, the ECB has always found answers to crises, within its mandate. The Court of Justice of the European Union has validated the OMT programme that was put in place in 2012 [a bondbuying programme for countries receiving financial assistance, which has not yet been used, ed.]. It was the Court’s judgment that the ECB should be allowed broad discretion when choosing its instruments.