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Prime Minister Lee Hsien Loong delivered his annual May Day Rally speech at D'Marquee in Downtown East on Sunday morning (May 1).

In his speech, PM Lee said that while it is still not quite time to rejoice yet, he thinks that Singapore has reason to feel relief after a "long battle" with the Covid-19 pandemic.

"And with everyone's hard work and cooperation, we averted the worst impact of Covid-19. Many workers still suffered reduced earnings as we tightened safe management measures, especially during the circuit breaker.

But throughout the pandemic, we kept job losses down and now the unemployment rate has almost fallen back to pre-Covid levels."

Singapore feels impact of Russia-Ukraine conflict

PM Lee explained that even before the war, countries were already restricting trade and investments with other countries that they no longer trusted. Furthermore, with the onset of the Covid-19 pandemic, there was further disruption to global supply chains and the vulnerabilities of these supply chains were exposed.

And now with the war in Ukraine, these trends are going to be pushed even further, he said.

He further spoke at length about the impact Russia's invasion on Ukraine had brought unto the world and Singapore.

He mentioned that the conflict is bad for every country, especially small countries like Singapore as the country's security and existence depend on the international rule of law. This is why Singapore has taken a strong stand by condemning the attack and imposing sanctions against Russia.

PM Lee also explained how the war had further impacted prices globally.

"Russia is the major exporter of oil and gas and now that supply is being disrupted. European countries are trying to stop buying energy from Russia. And Russia is also cutting off supplies to punish European countries for supporting Ukraine. And that's causing a worldwide energy crunch. And that's why our electricity and petrol prices have gone up sharply, and food prices have gone up too.

He added that Singaporeans are already feeling the impact of the war on the cost of living, and that it is a problem faced all over the world.

Ukraine is among the world's largest exporters of cereal crops like wheat, maize, barley, vegetable oils, and because of the war, Ukrainian farmers are running short. Short of seeds, of fertilisers even fuel for their tractors, that's assuming they can even can their fields and farm at all. And this has disrupted global food supplies and pushed food prices up which is why our bread prices have gone up in Singapore, for example."

Government is helping to cushion impact

However, he assured Singaporeans that the government is doing all it can to cushion the impact on the people, and alleviate the cost of living.

Incentives like the U-Save Rebates, CDC vouchers and S&CC rebates will reduce out-of-pocket expenses for nearly all households, and lower and middle-income households who need more help will get more, he said.

The Monetary Authority of Singapore (MAS) has tightened monetary policy to reduce imported inflation as well, resulting in the appreciation of the Singapore dollar.

Singapore is also taking steps to secure food and energy supplies in case the supplies are disrupted by the ongoing war.

Preparing for economic challenges

However, Singaporeans must also be prepared for more economic challenges in the year ahead, PM Lee cautioned.

Earlier in his speech, he mentioned that there may be a recession within the next two years.

"The fundamental solution to this is to make ourselves more productive, to transform our businesses, to grow our economy, to uplift everyone. Then our incomes can go up and that can more than make up for higher prices of energy and food. Then we can all become better off, in real terms."

He also said that there are limits to what Singapore can do to influence broader international trends.

"We have speaking rights, but we are a small voice. Singapore has to take the world as it is and develop a strategy that works for us in this troubled environment," he said.

You can listen to his speech here:

Top image screenshot from PMO.