Transcription
The situation in the Middle East has evolved, and it remains highly uncertain. Fighting has paused for now. But tensions remain high. Iran has closed the Strait of Hormuz, and the US has imposed blockades on Iranian ports. So, we are in a tense standoff. Neither side is willing to back down, and there is no clear path to resolution.
The Strait of Hormuz has been closed for more than 2 months. The impact is being felt not just in higher prices, but also in tightening supply. And here in Asia, we are especially affected because of our high dependence on energy and other critical supplies from the Gulf. Some countries in our region are already facing fuel shortages, as you can see from the news. Airlines have cut flights. Factories are reporting delays. And the disruptions will not stop at energy. Fertilizer, food, and other essential inputs will be hit next. We can expect shortages in more items to emerge.
Even when the Strait reopens, it will not be an immediate return to normal. Why? Because ports and energy infrastructure have been damaged. Shipping lanes will need to be cleared of mines. Confidence must be restored. That it is safe for ships to sail through, that insurance can be obtained, and people are prepared to take risks to go through the Strait. These things do not recover overnight. It will take months at least, before the situation stabilizes. So, we should not expect this crisis to be over anytime soon.
In fact, the pressures are likely to intensify. Supply disruptions will persist and may worsen in the months ahead. Uh, globally, inflation will rise, spreading from energy to food, and then other essentials. Some economies may well slip into recession. And Singapore will feel the impact directly. Our growth this year will slow, and inflation will be higher. And all this will put real pressure on businesses, workers, and households.
Older Singaporeans may remember the oil shocks of the 1970s. It was during that period that the world experienced stagflation in a major way. Stagflation is a combination of stagnation and inflation. So, you have high unemployment together with high inflation. It is the worst of both worlds and deeply painful for businesses and workers. Now, stagflation risks are rising again. And the International Energy Agency, in fact, warns that the current crisis could be even more severe than what the world experienced in the '70s. Uh, so, we must brace ourselves and be prepared for a more difficult period ahead. And I want to be upfront with all of you so that we are mentally prepared.
But amidst these realities, we can also look ahead with quiet confidence. We do not face this crisis from a position of weakness. Singapore is better prepared and in a much stronger position today. And this position was built up over time. We made the hard choices early, managing our finances prudently and building up our reserves. At the same time, we invested to strengthen our energy resilience. We reclaimed land. We built Jurong Island. We developed our refining and petrochemical industries. We dug deep to create underground storage in the Jurong Rock Caverns. We had no oil, no natural gas, and no guarantee that any of this would work. But we pressed on, and we built something that did not exist before.
And today, Singapore is a key node in global energy flows. This gives us a significant advantage. The world's leading energy companies operate here, refining, storing, and trading oil. They are connected to diverse supply networks around the world. So, when when one source is disrupted, they are able to draw on other sources. That is the advantage we have built over decades, not by chance, but through deliberate choices, sustained efforts, and discipline. We made this happen together.
But none of this runs on its own. Behind all of our efforts are our people, our workers. And this morning, I want to give a special shout-out to our brothers and sisters in the refineries, the power plants, and across the oil, petrochemical, energy, and chemical sectors. These are our unions in what we call OPEC, the OPEC cluster. Not the OPEC you read about in the news. This is the OPEC that powers our economy every day. You work round-the-clock through nights, weekends, and holidays. So, thank you for your dedication to keep the lights on and to keep Singapore going. >> [applause] >>
It's because of our workers, all of you. It's because of the choices we made decades ago that we can respond to the crisis from a position of strength. So, we are working closely with like-minded countries to strengthen supply chain resilience and to provide mutual support. We are securing our supply lines for energy and other essential goods. At the same time, we are stepping up support for Singaporeans. We acted early last month to roll out a support package. We are providing more help for businesses, especially those most affected by higher energy prices, as well as more support for households, U-Save rebates, enhanced cash payouts, and earlier CDC vouchers.
The government is doing its part, and businesses can step up, too. For example, NTUC FairPrice has frozen prices on essential items to keep them affordable. Thank you, FairPrice. I encourage all companies to do what they can. Support your workers and help ease the burden on Singaporeans together.
I know what many of you are thinking. The CDC vouchers were meant for January next year. Now, they have been brought forward. So, you ask, will there still be support later on? >> [cheering] >> Let me put it this way to all of you. The government has moved quickly to put in place an initial response to the crisis. But, we expect the situation to become more challenging over the course of this year, as I described just now. And if that happens, we will do more to help. >> [cheering] [applause] >>
Because in times like this, Singaporeans can count on one thing. Your government will act. We will do so decisively, and we will stand with you, with every Singaporean, every step of the way.