There are extensive studies on the current causes of global financial crisis. There is also extensive discussion on the damage caused by the current global financial crisis. The consensus is that the worst is over, but the recovery is tenuous as there is still on-going debate on whether the recovery is V- or W-shaped.
The purpose of this paper on Singapore is to examine how a city state with no resources and no domestic market can recover from the global financial crisis. The volume of trade is more than three times the GDP. There are almost a million foreigners working in Singapore against a 1.6 million local workforce. MNCs account for a large portion of total employment. The textbook style of Keynesian expansionary policy will not work. Any public projects will not have lasting multiplier to stimulate the local economy. Any schemes to boost the domestic purchasing power will only increase imports. Singapore is a financial centre which means that her ability to control the interest rate is futile.
But Singapore has recovered from the global crisis in terms of her GDP growth rate. The labour market has stabilized and the Singapore dollar is just as strong. The paper will examine how Singapore has been able to achieve economic recovery. In a nutshell, we will explain how Singapore’s Keynesian policy is geared towards saving jobs and Singapore’s exchange rate policy has been to protect exports and contain inflation.