Macroeconomic and Financial Stability

Financial Stability

Risks to financial stability have risen both globally and domestically, against the challenging macroeconomic backdrop.

The property market remained generally resilient with prices having moderated and moving more in line with economic fundamentals. MAS maintained the macroprudential measures applicable to the private residential property market.

  • Risks to global financial stability have increased, as a result of the significant hit to revenue and cash flows stemming from the COVID-19 outbreak. The sharp slowdown in growth came amid high corporate debt levels globally, built up over a long period of low interest rates. Investor confidence remains fragile, as uncertainty surrounding the duration and full economic impact of COVID-19 continues to linger. Consequently, portfolio capital flows of Emerging Market Economies remain volatile. A return of risk-off sentiment could trigger portfolio outflows, leading to tightened financial conditions that could further weigh on economic growth.
  • On the domestic front, MAS’ corporate, household and banking financial vulnerability indicators showed that these segments in Singapore remained resilient amid a challenging environment. The countercyclical capital buffer rate was maintained at 0%, as MAS had assessed that the risk of domestic credit overheating remained low.
  • The private property market remained broadly resilient. New sales from developers remained healthy in the year to Q1 2020, and prices moderated slightly in line with economic fundamentals.