IMF Staff Completes 2023 Article IV Mission to Singapore

May 17, 2023

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Based on the preliminary findings of this mission, staff will prepare a report that, subject to management approval, will be presented to the IMF's Executive Board for discussion and decision.
  • Singapore’s growth momentum has slowed in recent months, following two years of solid growth underpinned by strong economic fundamentals and decisive policies. Inflation remains elevated, although it has started moderating.
  • Monetary policy is appropriately tight and should maintain its tightening bias to rein in inflation while facilitating a soft landing. The tighter fiscal stance in 2023 will help moderate inflationary pressures. The financial sector remains sound buttressed by rigorous monitoring and supervision. Should downside risks materialize, Singapore can deploy its ample fiscal buffers judiciously.
  • The IMF team welcomes the authorities’ comprehensive efforts to transition towards a smarter, greener, more inclusive, and more resilient economy.

Singapore: An International Monetary Fund (IMF) team, led by Mr. Lamin Leigh, conducted discussions for the 2023 Article IV Consultation with Singapore during May 8-May 17, 2023. At the conclusion of the discussions, Mr. Leigh issued the following statement:

“Singapore’s recovery is one of the strongest among advanced economies, with overall activity at end-2021 having surpassed pre-COVID levels. The recovery momentum however has been moderating. Real GDP growth reached 3.6 percent in 2022 and is expected to significantly moderate in 2023, driven by weak performance of the trade-oriented sectors amid external headwinds. The labor market has been tight across sectors, though bottlenecks have started easing as foreign workers return, and is translating into sticky service price inflation. Headline inflation, though still elevated, has been moderating.

“GDP is projected to grow by 1 percent in 2023, reflecting weakening external demand due to a slowdown in major trading partners as well as slowing domestic demand following the post-reopening recovery. Headline inflation is projected to slightly moderate to 5.5 percent in 2023, reflecting the one-off effect of the GST rate hike, tight labor market, and policies to raise wages of lower wage workers. Downside risks are mostly external, notably an abrupt global slowdown, premature loosening of monetary policies by major central banks, and deepening geoeconomic fragmentation.

“The tighter fiscal stance in the FY2023 budget, combined with targeted support to the most vulnerable, will appropriately help moderate price pressures. Singapore has ample fiscal space to deploy if downside risks materialize. Going forward, Singapore is well-positioned to absorb rising fiscal pressures to address medium- and long-term challenges, including those arising from the rapidly ageing population and from climate-change risks.

“The Monetary Authority of Singapore (MAS)’s tight monetary policy stance is welcome. Going forward, monetary policy decisions should remain data-dependent and maintain the tightening bias with a continued focus on reining in inflation while facilitating a soft landing. The tight monetary policy stance may need to remain for longer or be further tightened, should inflation surprises re-emerge, to help prevent inflationary pressures from becoming entrenched.

“The financial sector remains sound, preserving Singapore’s role as an important regional financial hub. Liquidity risks in banks and non-bank financial institutions, as well as interest rate risk for highly leveraged entities, should continue to be closely monitored, particularly given heightened global economic and financial uncertainties. Along with MAS’ tighter macroprudential stance to reign in buoyant residential property markets, financial sector resilience should be preserved.

“The IMF team welcomes the authorities’ ongoing plans to accelerate digital adoption and innovation, particularly in the financial sector, climate-resilient infrastructure investment, and climate mitigation goals. Resource reallocation towards high-growth sectors and more sustainable activities is also a welcome move as it will support medium-term economic growth.

“The IMF team would like to express its gratitude to the authorities and other counterparts for their close collaboration and constructive discussions.”

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