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Road to Recovery

Singapore's Journey through the Global Crisis

Sanchita Basu Das

Publication Year: 2010

Singapore had been one of the nations severely affected by the 2008-09 global financial and economic crisis. The city state came under pressure through the financial, trade, and confidence channels. To counter these shocks, Singapore policymakers undertook unprecedented monetary and fiscal policy measures. They subsequently charted a revival strategy that would help the country emerge stronger after the crisis. These all-encompassing policies together with the global economic recovery in 2009 helped the city state bounce back faster and stronger than many other regional economies. This book provides an insight into the events that occurred during the crisis and Singapore's successful navigation to economic recovery. “Although much has been written about the global financial crisis of 2008-09, not enough has been said about how it affected Singapore and the policy response. In this highly readable book, Sanchita Basu Das fills this gap, explaining how the crisis rippled through the Singapore economy via trade channels, the financial sector, and asset markets. But the greatest strength of this volume is its comprehensive account of the extraordinary measures Singapore put in place to deal pre-emptively with what could have been huge declines in output and employment in the face of the collapse of trade and credit flows. Singapore's multi-pronged approach, and especially the fiscal support and loan guarantees contained in the 2009 budget, must go down as one of the boldest and most creative policy responses to a crisis. It is a valuable lesson to economics students and practitioners alike. This book gives you the full story.” -Vikram Khanna, Associate Editor, The Business Times “Sanchita Basu Das is to be congratulated for providing a fascinating, accessible, and forward-looking analysis of Singapore's response to the global economic crisis of 2008-09. As a highly trade-dependent economy, Singapore was hit hard by these events. But the government was nimble and quick to react. The author describes and evaluates this response, and draws out general lessons for crisis management and mitigation in small open economies. Highly recommended.” -Hal Hill, H.W. Arndt Professor of Southeast Asian Economies, Australian National University. “This is a comprehensive account of the impact of the global financial crisis on Singapore -- one of the most open economies in the world -- and policy responses by the government and central bank. The book identifies the need to move to a more knowledge-intensive economy as the key policy challenge for post-crisis Singapore.” -Masahiro Kawai, Dean and CEO, Asian Development Bank Institute “Singapore was affected disproportionately by the global economic crisis of 2008-09. While it is currently rebounding impressively, government officials and the private sector would do well to learn from the crisis experience in devising future policies. Moreover, the Singapore experience is instructive as to how external economic shocks can be transmitted to open economies and, hence, has great relevance beyond its borders. This book by Sanchita Basu Das gives a comprehensive survey of Singapore in crisis and provides a wealth of information and insightful analysis, using clear, non-technical language. It is extremely useful contribution to scholars, policymakers, and other students of Asian economics.” -Michael G. Plummer, Organisation for Economic Co-operation and Development (OECD)

Published by: ISEAS–Yusof Ishak Institute

Title Page, Copyright

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pp. vii-viii

List of Tables

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pp. ix

List of Figures

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pp. xi-xii

List of Boxes

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pp. xiii

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pp. xv-xvi

When I received the manuscript of this book from Ms Sanchita Basu Das, Lead Researcher for Economic Affairs in the ASEAN Studies Centre at the Institute of Southeast Asian Studies, I was, for a brief moment, reminded of the thoughts that ran through my head when I first heard the ...

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pp. xvii-xviii

Writing this book has been a wonderful and enriching experience for me, which would not have been possible without the help, support, and advice of my colleagues and family. The Institute of Southeast Asian Studies (ISEAS), Singapore provided me with the platform to write a book on Singapore and the global economic crisis. ...


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pp. xix-xxi

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1. Introduction

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pp. 1-15

From 2004 to the middle of 2007, the world economy was growing strongly, world trade was burgeoning, inflation was low, liquidity in capital markets was abundant, the financial sector was providing remarkable returns, profitability was high, and asset prices were rising. ...

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2. Global Financial and Economic Crisis: Causes, Impact, and Policy Response

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pp. 16-43

The global financial turmoil surfaced in the middle of 2007 as a result of defaults of sub-prime mortgage loans in the United States. It was blown into an unprecedented financial crisis in 2008 when a series of major financial institutions in the United States and Europe started to fail. ...

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3. Impact of Global Economic Crisis on Singapore

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pp. 44-69

After the onset of the global economic crisis in 2008, Singapore had become the first East Asian nation to fall into recession. The year-on-year growth rate had plunged from 7.7 per cent in 2007 to 4.5 per cent in H1-2008 (first half of 2008) and further to –9.5 per cent in Q1- 2009 (first quarter of 2009). Although the exposure of ...

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4. Singapore's Policy Responses to the Global Economic Crisis

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pp. 70-96

For Singapore, the recession came mainly through the fall in non-oil exports and output. The monetary and financial systems for the city state largely remained unscathed. The financial shocks were mostly felt through drying up of credit and capital flows due to heightened risk aversion. ...

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5. Singapore's Economic Perspective and Future Policy Directions

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pp. 97-127

Being a small and open economy, Singapore is susceptible to external shocks, but by the same measure, the city state tends to bounce back faster and stronger than many other regional economies. Thus, following the global economic recovery, Singapore also catapulted itself out of recession ...

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6. Lessons Learnt

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pp. 128-136

... Prior to the crisis, there were a lot of discussions on decoupling of emerging and developing economies from the West. In other words, it was believed that even if the advanced economies went into recession, Asia would be affected very marginally and would largely continue ...

APPENDIX I: MAS Monetary Policy Statements

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pp. 137-149

APPENDIX II: Key Budget FY2009 Initiatives

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pp. 150-180

APPENDIX III: Summary of the Economic Stategies Committee (ESC) Key Recommendations 1 February 2010

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pp. 181-189

APPENDIX IV: Key Budget FY2010 Initiatives

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pp. 190-216


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pp. 217-219


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pp. 221-227

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About the Author

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pp. 228

Sanchita Basu Das is the Lead Researcher for Economic Affairs in the ASEAN Studies Centre at the Institute of Southeast Asian Studies, Singapore. Prior to that, she worked in the private sector as an economist at Consulting Engineering Services, India, ABN AMRO Bank, India and ...

E-ISBN-13: 9789814311045
Print-ISBN-13: 9789814311052

Publication Year: 2010

Edition: 1