This was based on a comparison of 70 policy tightening episodes in 19 Advanced economies (AEs) and six Emerging Market Economies (EMEs). Strong growth and high job vacancies, as well as front-loaded rate hikes can help prevent a hard landing. Conversely, rapidly rising inflation, low term spreads and elevated debt levels raise the risk of a recession, especially if there are persistent negative supply shocks. Comparisons with the current conjuncture suggest a mixed prognosis across these factors. Overall, for the global economy to successfully stay on the ridge, inflation needs to peak soon, underpinned by improved demand-supply balance as multiple driving factors reequilibrate. This would lessen the constraints facing central bank’s responses – allowing the pace of monetary policy tightening to ease off by year-end. At that point, a relatively contained period of sustainable below trend growth should ensue with inflationary pressures gradually receding into 2023. If instead, the global economy veers off the ridge to a hard landing and equilibrating forces are stifled, the result will be higher inflation for longer, a more protracted period of monetary tightening, possibly higher unemployment, and mounting debt vulnerabilities. I note, but will not address here, that the Eurozone and other regions face additional idiosyncratic concerns which bear close monitoring. Singapore Economy: Some Pro-equilibrating Shifts  Some growth moderation The Singapore economy is moderating, with average growth of 4.1% (y-o-y) in H1 2022. Following the strong rebound of 7.4%, last year, the economy’s output gap is estimated to be mildly positive at mid-year.

Speeches  Published Date: 01 September 2022  “An Update on the Global and Domestic Economic Conjuncture” – Summary of Remarks by Mr Edward Robinson, Deputy Managing Director (Economic Policy) & Chief Economist, MAS, at a Citibank Macro Fireside Virtual Event on 1 September 2022 Summary of remarks on the Global and Domestic Economic Conjuncture Global Economic Developments: A Narrow Ridge to a Soft Landing Aggregate demand-supply imbalances continue to engender elevated inflation rates across many economies. However, tighter financial conditions, including from higher policy interest rates, coupled with fresh uncertainties, are imparting a moderating effect on demand among the advanced economies. This should dampen the pace of future price increases but still leave inflation somewhat elevated for a while. These ongoing global inflation-growth shifts present challenges for the calibration of the monetary policy stance. The perceived stridence of the recent Jackson Hole discussions belies a complex calculus confronting central banks. The path forward for the global economy can be cast in terms of a narrow ridge that needs to be traversed to achieve a soft landing, in which inflationary pressures recede with further rate hikes to a level above the neutral rate of interest. In this scenario, growth slows, but the current (positive) output and (negative) unemployment gaps do not reverse and widen materially. It is useful to illustrate these considerations with respect to the US economy. The ridge to a soft landing in the US appeared to reach a more challenging turn during the early to mid-summer.