Introduction
Chairman Tan Sri Dato’ Sri Zamzamzairani Mohd Isa, 
Group President & CEO Dato’ Khairussaleh Ramli, 
Distinguished guests, ladies and gentlemen.
 
1. Thank you for inviting me to address Maybank’s Invest ASEAN 2022 Conference. 

2. When Andi invited me, I struggled to think of how to best describe the strange few years behind us, and the strange few years ahead of us. 

3. It feels like we’ve just jumped out of a hot COVID frying pan into the fire of a hot war and a hotter planet. 

4. The COVID-19 frying pan has exacted a significant public health toll on our world. 

a. The WHO estimated that there were 14.9M excess deaths associated with the COVID-19 pandemic in the last two years. Most of the access deaths (84%) are concentrated in Southeast Asia, Europe and the Americas.   

5. The COVID frying pan looks like it’s cooling now, with most countries living with the virus, opening their borders and resuming some form of normalcy, of course, with exceptions and caveats.

a. The global economy started to emerge from COVID-19 towards the end of 2021. Global growth strengthened in the last quarter of 2021 and into early 2022. 

b. Rising vaccination rates allowed most countries to shift towards endemicity. 

c. The connection between COVID-19 infections and economic activity has also weakened significantly. 

d. Clear improvements in the public health situation also released pent-up demand, reinforced by significant policy support.

6. It all appeared that after a difficult two years in the COVID-19 frying pan, that we would get a breather. Are we getting a breather?

a. Yesterday, the World Bank estimated that world growth is expected to slow to 2.9% this year, from 5.7% in 2021, a dimmer prognosis compared to what it produced six months ago, before Russia’s invasion of Ukraine.

7. It might seem now that we’re jumping from a hot pandemic, to a hot war, hot prices and a hotter planet. 

8. The hot pandemic and the hot war have led to hotter prices

9. Due to the pandemic, the strength of expansion in the latter half of last year had rapidly eroded spare capacity in many economies and has also contributed to supply-demand mismatches. 

a. Labour force participation in many countries fell due to people’s concerns for their health. 

b. In some countries, it also reflected the large fiscal support provided during the downturn. It has taken longer for workers to return to employment than many analysts expected a year or so ago, contributing to a tight labour market. 

c. There have also been repeated interruptions to production and transport in specific industries. This has hampered cross-border networks and led to higher costs and delivery times. 

d. China’s zero-COVID strategy and the recent lockdowns in Beijing and Shanghai placed a heavy toll on its people and exacerbated supply disruptions and rising prices. 

10. Then there’s the hot war. The main economic impact of Russia’s invasion of Ukraine has come through a sharp rise in energy and food prices, reflecting both countries’ significant role in the global supply of those products. 

a. Oil prices are up 50% year-to-date, while grain and fertiliser prices have also risen sharply and may stay high for an extended period. Even chickens are not spared the price hikes. Although KJ said the ban is unlikely to last a few months.

b. These higher commodity prices come on top of the global inflationary impulse that had already emerged in 2021 and will further raise production costs and consumer prices.

c. Overall consumer price inflation has also accelerated most sharply in the major advanced economies, where economic recoveries are more mature compared to Asia ex-Japan.

11. We know about the hot war, but let’s also not forget that our planet is also getting hotter. 

a. Global temperatures have risen by 1.1 degree Celsius, above pre-industrial levels. 

b. Global greenhouse gas emissions are also rising. Why? Because as the global economy started to recover in 2021, we began to use more fossil fuel. In fact, demand for coal has risen, and fossil fuels continue to account for more than 80% of global primary energy consumption. Bad habits stick. 

c. As the singer-songwriter Ed Sheeran put it, “every time you come around, you know I can’t say no… ooh-ooh, ooh-ooh, my bad habits lead to you”

Near-term Outlook

12. Despite these recent headwinds, there is some indication that global economic activity has not been derailed that much. 

a. Manufacturing sector activity has remained resilient. Global manufacturing PMI for May is 52.4, lower than the 53.7 recorded in February before the war broke out, but still well above the 50-point threshold, signifying expansion.

b. Households also have some buffer against surging prices, because they saved substantially during the pandemic. Some drawdown of these savings could help to sustain household spending.

c. Growth in Asia ex-Japan is expected to stay firm. In emerging Asia, the IMF expects a relatively firm expansion of 5.4% this year. Resilient final demand in the advanced economies will continue to support manufacturing and trade in our region. Domestic demand recovery, which has so far lagged advanced economies, will likely also underpin this growth. 

d. Although China’s economy could slow even more than expected, policymakers there retain considerable room for policy responses if needed.

e. Global inflation is projected to remain high in 2022, with high global commodity prices pushing headline inflation rates. Futures markets suggest prices at above their 2021 averages throughout 2022.

f. Nonetheless, inflation should moderate next year. Major central banks have expressed strong willingness to do what it takes to restore price stability. Monetary policy tightening should keep expectations anchored, and arrest inflationary momentum directly, assisted by progressive unblocking of supply chains.

13. Inflation in the advanced economies, including the US, could prove higher and stickier than projected. Inflation expectations could become unanchored, which could worsen the short-term trade-off between output and inflation confronting policymakers.

14. Major central banks have responded by withdrawing policy accommodation. The synchronous rise in policy rates has tightened global financial conditions. Financial markets in the US and the Eurozone have begun to reprice assets to factor in expectations of policy normalisation.

15. The global financial system has thus far absorbed the recent string of economic shocks and policy shifts without significant stress. But vulnerabilities lurk in the background. Corporate and sovereign debt increased during the pandemic, partly because of debt moratoriums and fiscal stimulus programmes. If financial conditions tighten more sharply than expected, debt distress or other forms of market dysfunction could emerge.

16. But while tighter global financial conditions combined with commodity price shocks, have been challenging for Asian economies in the past, Asia is better positioned than during the “taper tantrum” episode a decade ago – a fact which investors have also recognised.

a. Most emerging Asia currencies have depreciated only slightly against the US dollar year-to-date.

b. We have also not seen a destabilising rush for the exits by portfolio capital. Spreads on emerging Asia dollar bonds have generally widened less compared to broader EM indices.

c. Within ASEAN, investor perceptions of sovereign risk have been relatively benign so far. The COVID-19 crisis had only a transitory effect on ASEAN credit risk premia. Default risk for the sub-region has been declining since mid-2020, restoring the previous long-term trend.

17. This in large part speaks to how Asian economies have strengthened their macroeconomic fundamentals over the years. They reduced fiscal and external deficits, built up larger reserve positions and established stronger and more credible policy frameworks.

Singapore

18. On the domestic front, Singapore has weathered the COVID-19 pandemic relatively well. The IMF, after its recent Annual Article IV Consultations, noted that our economy has recovered sharply from the pandemic, attributing it to decisive policy responses, impressive vaccine rollouts, and our strong economic fundamentals.

19. But we remain vigilant. 

20. The near-term outlook has become more uncertain due to external headwinds, which could in turn dampen prospects for our external-facing sectors including manufacturing and financial services, which were key pillars of support during the pandemic. 

21. We expect growth in these sectors to slow this year amid some pullback in external demand, as well as in business and financial market sentiment. 

22. But this should be offset somewhat by our substantial easing of domestic and border restrictions since end-March. All in, we expect Singapore’s economy to likely to come in at the lower half of the 3–5% forecast range in 2022.

23. At the same time, Singapore is not immune to the hot war, the now less hot pandemic and hotter prices. These will filter through to Singapore’s imported costs over the rest of this year and possibly into next year.

24. There may also be embers from the COVID-19 pandemic that may flare again. The coming winter months and waning vaccine protection could spring some surprises. 

25. But let’s end on a more positive note, and what we can do to cool this hot situation. 

a. Continue to make friends, diversify and invest in other parts of the world. Trade with one another. Singapore is always looking to explore new agreements - RCEP, CPTPP, DEAs with Australia, Korea and the UK, DEPA with Chile and New Zealand, PASFTA with Chile, Colombia, Mexico and Peru, MSFTA with Argentina, Brazil, Paraguay and Uruguay. 

b. In ASEAN, RCEP represents an important milestone for us. It sends a strong signal to the world that ASEAN remains committed to free and open trade as we move towards becoming the world’s fourth-largest economy by 2030.

c. Manage inflation decisively. MAS has been pre-emptive in tightening monetary policy, having embarked on the process since October last year. The cumulative effects of three rounds of tightening will help to slow inflation momentum. Targeted fiscal support will also help more vulnerable households cope with higher costs of living and help businesses continue to push ahead with upgrading and restructuring for the future. 

d. Commit to climate goals. Singapore is accelerating our long-term climate change plans, and also stepping up our 2030 goals. This year’s Budget laid this clearly how this will be a priority for us moving forward. MAS is also playing a role in developing global and regional taxonomies and green standards, as well as building Singapore as a green finance hub.

26. Ladies and Gentlemen, it’s been a tough two years and it may get even more challenging. We discussed today how it appears like we are jumping from the hot pan(demic) into the fire of a hot war, hot prices and hotter planet. But we also discussed how there are signs that it may cool, and how we can play a part together, to resume our path towards sustainable growth and a sustainable planet. 

27. I hope that all those attending this conference will continue to be inspired as you hear more about the investment opportunities in ASEAN. 

28. Thank you for your attention, and I wish you a fruitful time at the Conference.