Fed cut alone not enough to boost confidence: Chan Chun Sing

[SINGAPORE] Singapore's Trade and Industry Minister Chan Chun Sing said it'll take more than an interest rate cut by the Federal Reserve to boost sentiment in the global economy amid a spreading coronavirus outbreak.

"It takes more than just a Fed cut to restore the confidence because people must see and feel for themselves the confidence in how governments are handling this in a coherent way," Mr Chan said in an interview Wednesday with Bloomberg TV's Haslinda Amin.

The Fed on Tuesday slashed interest rates by half a percentage point in the first such emergency move since the 2008 financial crisis, reflecting global policy makers' concern about the virus's impact on growth.

"I'm not sure that I would characterise it as a panic but I think many central banks in the world would want to work together to try to restore confidence in the current situation," Mr Chan said.

It's "too early to say" if the global economy will plunge into recession, Mr Chan said, although there's growing concern the recovery will be U-shaped, or L-shaped, implying a more protracted rebound.

Trade-reliant Singapore last month lowered its economic growth forecast for 2020 to a midpoint of 0.5%, from 1.5%. It also unveiled a budget with S$6.4 billion in targeted measures to support sectors hurt by the virus outbreak and US-China trade tensions last year.

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Mr Chan said he remains "cautiously optimistic" about the city state's manufacturing outlook. While some sectors will require adjustment, there are others like biopharma and digital technology, that may do better, he said.

On the electronics sector, "in the short term, I think you will see a bit of turbulence but the longer term trend, with the introduction of 5G and associated technologies, that will lead the global electronics recovery," he said.

BLOOMBERG