AS Singapore's economy ground to a halt in the second quarter, a recession - technical or otherwise - looks likelier than before, analysts say, while adding that the chance remains low.
Still, rattled by the quarter's lacklustre 0.1 per cent year-on-year growth, they tilted on Friday towards expectations of monetary easing at the central bank's October meeting.
Meanwhile, political leaders have doubled down on economic transformation as the long-term silver bullet.
The Monetary Authority of Singapore (MAS) stood pat on monetary policy this April - after stepping up the pace of Singdollar appreciation at its two meetings prior - and watchers again expect the reins to loosen when it comes to the exchange rate target.
Amid external challenges, domestic-facing sectors may not be enough to keep the economy afloat, according to Joseph Incalcaterra, HSBC's chief Asean economist. He believes that the broad-based decline "points to the need for more policy support".
Barclays economist Brian Tan, who said that a technical recession "is not our base case but cannot be ruled out", suggested that the MAS could go as far as halting Singdollar appreciation altogether in such a scenario.
United Overseas Bank analysts have affirmed the house's prediction of the Singdollar weakening to 1.40 against the greenback by year-end, although DBS chief economist Taimur Baig also noted a bias from "the ultra-dovish stance taken by G3 central banks" in the US, Europe and Japan.
"One positive is a probable Fed rate cut in the third quarter, which may ease debt servicing costs and provide some support," Maybank Kim Eng economist Chua Hak Bin said in an e-mail, referring to expectations that the US Federal Reserve will soon set the tone for lower interest rates.
But Minister for Trade and Industry Chan Chun Sing stressed in a Facebook post on Friday that the government's strategy "is not to artificially boost demand in general but to surgically help our companies and workers adjust to the new realities" with new capabilities, skills and markets.
Meanwhile, Deputy Prime Minister Heng Swee Keat and Manpower Minister Josephine Teo cited sectors like information and communications as fields with job and growth prospects.
Political watcher Eugene Tan, a Singapore Management University law professor, told The Business Times the Cabinet members' online remarks are "clearly an attempt to reassure the ground". Amid popular expectations of a general election in the year ahead, he believes the People's Action Party has worked "since 2015, in my view" to forestall opposition campaigning on bread-and-butter issues.
Ho Meng Kit, CEO of the Singapore Business Federation, echoed the officials' affirmation of "strong economic fundamentals and sound strategies".
"As a small, open economy, Singapore's GDP slowdown, led by the manufacturing sector, is not unexpected against a backdrop of global uncertainty and protracted US-China trade tensions," he told BT in an e-mail.
"While the figures came in weaker than expected, there is no need for alarm or additional stimulus or relief measures at this point," he added, citing ongoing business initiatives such as SMEs Go Digital and Scale-Up SG.
Still, Citi analysts Kit Wei Zheng and Ang Kai Wei suggested in a report: "With the 'strong' fiscal position reiterated and convergence of business and electoral cycle imperatives, off-Budget measures aimed at lowering business costs are also possible."
This tracks OCBC Bank treasury research and strategy head Selena Ling's observation that the government may unleash "potential targeted stimulus as there is ample fiscal headroom".
Rob Carnell, chief economist and head of Asia-Pacific research at ING, told BT that options to boost investment, besides a slower Singdollar gain, may also include tax credits. "I would probably focus policies on investment and (research and development) activity. This seems odd in a downturn, but can smooth activity and provide a useful headstart when the upswing happens."