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. manufacturing activity is slowing after a robust showing throughout 2021. the travel - related and domestic consumer - facing sectors are strong, as domestic mobility indicators have returned to pre - covid levels. it is estimated that domestic economic output has reached close to its pre - pandemic trajectory ( i. e., the present level of gdp envisaged in january 2020 ). singapore ’ s gdp growth is likely to come in between 3 and 4 % this year, which would bring the average pace of expansion over 2021 - 22 to around 5. 5 %. this outlook is strongly predicated on the prospects for singapore ’ s three main final demand markets – china, asean - 5 and the us. growth will be led by the domestic - oriented and travel - related sectors, while the contribution of the trade - related sectors could retract from last year. ongoing costs pass - through core inflation rose to 3. 8 % y - o - y in q2, reflecting both imported cost - push and broader demand - pull pressures. core inflation is expected to remain elevated this quarter,

. as schedule supply - side factors have featured prominently in the inflation run - up. there are nascent signs of an easing in supply frictions which, if sustained, can take some of the burden of restoring price stability away from demand, and incur a smaller trade - off between inflation and growth. a pick - up in productivity growth, and some rise in the labour force participation rate ( lfpr ) would also relieve cost pressures. however, productivity gains of the mid - nineties that allowed the federal reserve to hike by 300bps with minimal output loss were exceptional and are unlikely to be replicated. is schedule interest rate sensitive sectors need to respond sufficiently to the tightening of policy in order to moderate demand, without tipping the economy into a sharp or broader downturn. tighter financial conditions can restrain demand via transmission channels working through higher mortgage rates, more selective credit underwriting and wealth effects from lower equity prices. if these channels begin to restrain growth in 2022 at a time when corporate and household balance sheets are still strong, they contribute to achieving a soft landing. phillips curve combined with labour supply improvements, employment needs to moderate sufficiently to cool wage growth without eliciting a sharp rise in the unemployment rate. some relief could come from a rise in the lfpr. post - covid normalisations could see the return of some of the “ missing ” 1 - 1. 5 million workers that have exited the labour force because of the pandemic. the present strength in labour demand is reflected in an unusually high ratio of two vacancies for each unemployed person. some reduction in vacancies will not generate negative income effects in the same way that outright layoffs would. for a “ soft landing ”, the non - accelerating inflation rate of unemployment ( nairu ) would have to converge to its lower pre - covid level at a faster pace than actual unemployment rises. a return of the nairu to its value before 2020 would verify the absence of labour market scarring. soft landings a recent bank for international settlements ( bis ) study [ 1 ] usefully identified some stylised facts on hard versus soft landings in the global economy. 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