Growth in public credit and foreign new positions has brought a 12.8% year-on-year increase in Singapore’s broad money supply, RHB’s team of economists note. This is an expansion from the 10.8% growth logged in May.

Of the segments, growth was seen in public credit (+17.1%), net foreign positions (+19.6%) and government deposits (+30.5%).

Singapore’s foreign reserves also expanded by US$11.5 billion ($15.8 billion) to reach US$31.5 billion.

However, the expansionary trend was not extended to businesses who are still reeling from poorer sentiments, the RHB team observes.

“Sentiment across various business segments remain weak as firms are pessimistic about the recovery of activities, amid risks of a rise in new infections and re-closure of borders,” they point out in a July 30 note.

Their comments follow a 1% drop in total business loans in Singapore to $425.85 billion in June. This follows weaker lending to transport, storage and communication and general commerce and financial institutions,” the Monetary Authority of Singapore (MAS) notes.

See: Singapore's bank lending continues decline for the fourth month in June

Aside from the pandemic, businesses – particularly the ones in manufacturing –uncertainty in global trade and macroeconomic conditions as areas of concern, in the latest quarterly outlook survey published on July 30.

See: Covid-19 and trade tensions dampen Singapore firms' sentiments about 3Q2020

To Selena Ling, Head of Research and Strategy at OCBC Bank this does not come as a surprise.

“The Covid-19 pandemic implications in terms of lower external demand and global supply chain disruptions have not gone away,” she observes in an Aug 3 note.

“The domestic recession story is here to stay with full-year GDP growth still likely to be around -5.5% y-o-y, the worst annual performance since independence”.

To this end, Ling, and the RHB team expect total unemployment numbers to continue rising.  “The lacklustre employment outlook is more a function of overall demand-supply dynamics,” stresses Ling.

See: Total employment sinks deeper in June, following circuit breaker measures

Across the manufacturing sector, all clusters save electronics have seen a smaller workforce in 2Q20. Similarly, segments in the services sector have been operating on a smaller workforce with accommodation industry and amusement and recreation services being the most bearish on operating receipts, says Ling.

With this in mind, the RHB team is looking at a downtrend in consumer loans, as rising total unemployment numbers deter consumers from applying for new loans. Already, the segment posted a 0.05% decline in disbursements to $254.51 billion in June.

Ling meanwhile suggests that Singapore may well get more policy assistance. One way will be through the extension of the Jobs Support Scheme, “even if it is calibrated and more targeted”.

Other schemes such as the SGUnited Jobs and Skills programme could also be accelerated and/or expanded to cater to PMETs , Ling adds.