IMF Staff Completes 2023 Article IV Mission to Singapore

IMF News, May 17, 2023

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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.
Press Release No. 23/153
Date of end-of-mission press release: May 17, 2023.
End-of-Mission press releases convey preliminary findings after a visit; the views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board. Staff will prepare a report, subject to management approval, for the IMF's Executive Board.

Real GDP growth reached 3.6 percent in 2022.
GDP is projected to grow by 1 percent in 2023, reflecting weakening external demand due to a slowdown in major trading partners and slowing domestic demand following the post-reopening recovery.
Singapore’s recovery is described as “one of the strongest among advanced economies,” with overall activity at end-2021 having surpassed pre-COVID levels, but recovery momentum has been moderating.
Trade-oriented sectors are performing weakly amid external headwinds.

Headline inflation is described as “still elevated” but has “started moderating.”
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.
The Monetary Authority of Singapore (MAS)’s tight monetary policy stance is welcomed.
Monetary policy recommendations:
- Maintain data-dependent decisions and a tightening bias to rein 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 labor market has been tight across sectors.
Bottlenecks have started easing as foreign workers return.
Tight labor market conditions are translating into sticky service price inflation.

The FY2023 tighter fiscal stance will help moderate inflationary pressures.
The IMF notes Singapore has ample fiscal space and fiscal buffers that can be deployed judiciously should downside risks materialize.
Going forward, Singapore is described as “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 financial sector remains sound, preserving Singapore’s role as an important regional financial hub.
Risks highlighted for close monitoring:
- Liquidity risks in banks and non-bank financial institutions.
- Interest rate risk for highly leveraged entities.
- Heightened global economic and financial uncertainties.
Macroprudential actions:
- MAS’ tighter macroprudential stance to rein in buoyant residential property markets is noted as supportive of preserving financial sector resilience.

The IMF team welcomes the authorities’ comprehensive efforts to transition towards a smarter, greener, more inclusive, and more resilient economy.
Ongoing plans welcomed by the IMF team include:
- Accelerating 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 to support medium-term economic growth.

IMF Staff Completes 2023 Article IV Mission to Singapore — Press Release No. 23/153, May 17, 2023.