The crisis that has been unfolding in Ukraine has left citizens around the world worried. In Singapore, many wonder how it would impact us.
In a Parliamentary session yesterday (28 Feb), Trade and Industry Minister Gan Kim Yong finally gave the answers — we can expect prices of various commodities to increase, including petrol and electricity.
Since the changes are highly dependent on how the conflict unfolds, Minister Gan outlined what Singapore residents can expect.
During a Parliamentary sitting on Monday (28 Feb), Minister Gan spoke about the impact of the Ukraine crisis on Singapore’s economy, as part of the debate on Budget 2022.
Sharing the immediate assessment first, he said that the impact has been “manageable for now”.
This is because Singapore companies have a limited presence in Ukraine, and we don’t import significant essential supplies from there.
Moreover, strategies in response to the pandemic such as diversifying imports, stockpiling, and producing locally to manage supplies are helping us greatly.
Despite the measures, Minister Gan reminded us that the conflict is still evolving.
With the sanctions many countries have imposed on Russia, energy prices such as that of petrol, diesel, and electricity will rise in the coming weeks.
As Singapore has imposed our own sanctions too, Minister Gan emphasised the importance of making a clear stand in spite of the price we’d have to pay.
Since Russia is a major exporter of oil and natural gas, and Singapore imports a lot from them, we’ll feel the impact in this area most.
Motorists should thus expect pump prices for petrol and diesel to “rise in time”.
Households and businesses, meanwhile, should foresee an increase in electricity prices.
All in all, the rising prices will further raise the cost of living here.
Besides energy costs, Minister Gan also forecasted the rise in prices of commodities like wheat, nickel, and palladium, which Russia exports.
Supply disruptions will cause the prices of goods that use these materials to increase.
Nickel, for instance, is essential for the production of stainless steel items in the construction sector.
The authorities are thus working with the relevant companies to review their business plans and minimise disruptions to their operations.
With ongoing global uncertainty, there will also be an impact on investments, which Minister Gan says has “clouded our economic outlook”.
However, they are unable to determine the possible inflation rate and impact on our GDP as yet.
Such outcomes will depend on how the conflict in Ukraine unfolds. How the world responds, and the long-term impacts of these factors matter too.
What is certain is that inflationary pressures will linger for some time, particularly due to the rising energy costs.
As questions arise about what Singapore can do to cope, Minister Gan made it clear that as an open economy, we cannot completely insulate ourselves.
But the Government will do its best through various support measures such as those they’ve introduced in Budget 2022.
Promising to monitor the situation closely, Singapore will consider introducing additional measures if need be.
Already dealing with the challenges of an ongoing pandemic, Singapore will certainly have more to overcome in the near future.
Should the Ukraine crisis escalate, we’ll have to brace ourselves for more economic challenges.
Let’s thus hope that the conflict will die down soon, for the safety of Ukrainian residents and the stability of the world at large.
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Featured image adapted from MCI on YouTube.
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