In part, domestic wage growth and other business costs could be temporarily tempered by the initial cyclical productivity uptick in some capital intensive sectors of the economy. For the year as a whole, headline CPI inflation is projected to average between 2.5% and 3.5%. MAS underlying inflation, which excludes the cost of accommodation and private road transport, will come in at around 2%. BIS Review 103/2010  1  6. When Singapore entered the recession in 2008, monetary policy, followed by fiscal policy, was eased to provide support to the domestic economy. As economic activity recovered swiftly in 2009, macroeconomic policy settings were recalibrated to levels which were conducive to sustainable growth and medium-term price stability. In a pre-emptive move, MAS tightened monetary policy in April 2010 by re-centring the $ policy band upwards and restoring its modest and gradual appreciation path. 7. Looking ahead, the outlook of the industrialised economies remains uncertain. However, there is sufficient momentum from the Asian economies and domestic industries that will continue to support Singapore’s economic activity at a high level for the rest of the year. While CPI inflation is expected to pick up towards the latter part of the year, it has evolved broadly as anticipated during the April review. At this stage, we assess that the current monetary policy stance of a modest and gradual appreciation of the $ policy band remains appropriate. Strengthening the financial system 8. Singapore’s financial system remained resilient during the global crisis.

Heng Swee Keat: Financial developments in Singapore Opening remarks by Mr Heng Swee Keat, Managing Director of the Monetary Authority of Singapore, at the press conference on the Monetary Authority of Singapore’s Annual Report 2009/10, Singapore, 29 July 2010. *  *  *  Strong recovery from the recession 1. The Singapore economy has recovered strongly from the recession. Five quarters since GDP reached a trough, Singapore’s output has exceeded its pre-crisis peak by 13.3%. The rapid climb from the trough can be traced to several inter-related factors. In particular, the domestic economy had been lifted by the cyclical upturn in global trade and financial market conditions since early 2009, supported by inventory restocking and unprecedented policy stimuli in the major economies. Given its openness and competitiveness, Singapore was in an especially strong position to benefit from these global forces through our externally-oriented sectors. In addition, investments made in the earlier years were completed in time to tap onto the global upturn. These investments introduced new activities in Singapore’s economic landscape, including high-end manufacturing and tourism services, and strengthened the competitiveness of our existing industries. 2. Global markets also recovered strongly after March as the financial system stabilised and investor confidence recovered. Taking into account translation effects stemming from the stronger Singapore dollar, interest and dividend income, as well as gains in the valuation of assets, MAS recorded a net profit of $ billion during the financial year. 3. Looking forward, considerable risks remain in the global economy and the global financial system.