IMF Executive Board Concludes 2019 Article IV Consultation with Singapore
IMF News, July 15, 2019
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- Published: July 15, 2019
Macroeconomic performance and recent developments
- GDP per capita more than doubled in the last twenty years (no numeric year-over-year given beyond 2018 value).
- GDP per capita (2018): US$64,567.
- Nominal GDP (2018): US$364 billion.
- Population (2018): 5.64 million.
- Economic activity moderated in 2018: growth tapered to 3.1 percent in 2018 after a surge in domestic demand in 2017.
- Growth decelerated to 1.2 percent in 2019Q1 compared to the previous year, as manufacturing decelerated.
- Labor market in 2018: unemployment declined, employment expanded, and real wages grew (no further numeric breakdown provided).
- MAS core inflation slowed slightly to 1.6 percent on year-on-year basis in 2019Q1.
- Headline inflation pressures remained modest in 2018; decline in electricity prices and lower global oil prices contributed to lower inflation.
- Current account surplus declined in 2019Q1 from a year ago but remains large as a share of GDP.
Outlook and risks
- Short-term projection: growth is expected to slow to 2 percent in 2019.
- Medium-term projection: growth should stabilize around 2½ percent.
- Drivers:
- With less support from external demand, growth drivers are projected to shift back to domestic demand.
- Investment is expected to pick up with the push for digitalization and new industry-related projects.
- Over the medium term, growth increasingly driven by modern services alongside other trade-related sectors.
- Risks: tilted to the downside and mainly external, including:
- a tightening of global financial conditions,
- escalation of sustained trade tensions,
- deceleration of global growth.
Executive Board assessment and policy recommendations
- Directors commended sound macroeconomic management and strong policy frameworks contributing to robust and resilient performance and reduced income inequality.
- Fiscal policy:
- Directors supported the use of Singapore’s ample fiscal space over the medium and long terms to address age-related spending, climate change, expansion and renewal of infrastructure, and programs to help workers and firms adapt to technological change, while preserving adequate fiscal buffers.
- Directors recognized higher government spending would support external rebalancing given significant leakages through trade and remittances.
- A few Directors called for greater use of fiscal policy for a more balanced growth.
- Monetary policy:
- Directors supported a broadly neutral monetary policy stance and recommended monetary policy remain data-dependent.
- If downside risks materialize, fiscal policy should be the first line of defense and macroprudential policy could be eased while maintaining caution vis-à-vis financial stability issues.
- Directors welcomed authorities’ commitment to begin publishing foreign exchange intervention data to improve transparency.
- Financial sector and macroprudential policy:
- Directors welcomed FSAP findings and supported main recommendations.
- Singapore’s financial system considered resilient, underpinned by a strong regulatory and supervisory framework.
- Liquidity stress tests reveal vulnerability in U.S. dollar liquidity; Directors encouraged prioritizing bolstering banks’ foreign exchange liquidity.
- Directors urged further progress in enhancing the bank resolution framework by devoting more resources to the Monetary Authority of Singapore’s resolution unit.
- Directors took positive note of reforms to reinforce payment system safety.
- Directors welcomed proactive use of macroprudential and other property-related measures, commended continued monitoring, and suggested eliminating residency-based differentiation for the Additional Buyer’s Stamp Duty, then phasing out the measure once systemic risks dissipate.
- Financial innovation and integrity:
- Directors supported balancing promotion of financial innovation against preserving financial stability, investor protection, and financial integrity.
- Calls for continued vigilance to guard against money laundering/terrorism financing and cyber-risk and to minimize reputational risk.
- Structural reforms and social considerations:
- Directors commended structural reform agenda to raise productivity and turn Singapore into a global innovation hub through incentives to automate and innovate.
- Noted programs to drive digitalization and technological adoption among businesses and to promote lifelong learning and skill enhancement among individuals.
- Called for continued monitoring of social impact of economic transformation and greater efforts to incentivize uptake of existing programs, especially among those more at risk of displacement by automation.
- Emphasized labor market policies should remain nimble to the rapidly changing nature of work.
- Directors welcomed authorities’ efforts to reduce Singapore’s carbon emissions.
Selected economic and financial indicators (key figures and projections)
- Main goods exports (2018, percent of total exports):
- Electronic products: 30 percent
- Mineral fuels: 19 percent
- Chemical products: 14 percent
- Top three destinations for goods exports (2018, percent of gross goods exports):
- China: 12.2 percent
- Hong Kong SAR: 11.8 percent
- Malaysia: 10.9 percent
- Projections and historical values (Real GDP growth — percentage change):
- 2014: 3.9
- 2015: 2.9
- 2016: 3.0
- 2017: 3.7
- 2018: 3.1
- 2019: 2.0
- 2020: 2.3
- Total domestic demand (percentage change):
- 2014: 2.1
- 2015: 0.4
- 2016: 5.5
- 2017: 6.5
- 2018: 1.1
- 2019: 3.3
- Gross fixed investment (percentage change):
- 2014: 4.2
- 2015: 6.4
- 2016: -4.0
- 2017: 2.8
- Change in inventories (contribution to GDP growth, percentage points):
- 2014: -0.9
- 2015: -3.0
- 2016: 1.4
- 2017: 0.3
- 2018: 0.0
- Net exports (contribution to GDP growth, percentage points):
- 2014: -1.1
- 2015: 0.1
- 2016: 0.7
- Saving and investment (percent of GDP):
- Gross national saving:
- 2014: 47.4
- 2015: 42.6
- 2016: 44.2
- 2017: 44.5
- 2018: 43.5
- 2019: 43.3
- Gross domestic investment:
- 2014: 29.4
- 2015: 25.4
- 2016: 26.7
- 2017: 28.2
- 2018: 26.6
- 2019: 27.7
- 2020: 27.5
- Inflation and unemployment (period average, percent):
- CPI inflation:
- 2016: -0.5
- 2017: 0.6
- 2018: 1.3
- CPI inflation, excluding food and energy 1/:
- 2014: -0.7
- 2015: -0.1
- 2016: -0.2
- 2017: 1.2
- MAS core inflation 1/:
- 2014: 1.9
- 2015: 0.9
- 2016: 1.5
- 2017: 1.7
- Unemployment rate:
- 2018: 2.2
- Central government finances (percent of GDP) 2/:
- Revenue:
- 2014: 17.1
- 2015: 17.3
- 2016: 18.5
- 2017: 19.1
- 2018: 18.1
- 2019: 18.2
- Expenditure:
- 2014: 12.2
- 2015: 14.1
- 2016: 15.2
- 2017: 14.2
- 2018: 14.4
- Net lending/borrowing:
- 2014: 4.9
- 2015: 4.0
- Net lending/borrowing, excluding nonproduced assets:
- 2014: 1.8
- Primary balance 3/:
- 2014: -2.6
- 2015: -1.5
- 2016: -2.3
- 2017: -2.7
- 2018: -2.9
- Money and credit (end of period, percent change):
- Broad money (M2):
- 2014: 7.6
- 2015: 8.4
- 2016: 4.1
- 2017: 5.1
- Credit to private sector:
- 2014: 7.0
- 2015: 2.5
- Three-month S$ SIBOR rate (percent): not shown (…).
- Balance of payments (US$ billions):
- Current account balance:
- 2014: 56.5
- 2015: 53.0
- 2016: 55.7
- 2017: 55.4
- 2018: 65.1
- 2019: 58.7
- 2020: 61.2
- (In percent of GDP):
- 2014: 18.0
- 2015: 17.2
- 2016: 17.5
- 2017: 16.4
- 2018: 17.9
- 2019: 15.8
- Goods balance:
- 2014: 86.7
- 2015: 92.6
- 2016: 87.1
- 2017: 92.5
- 2018: 98.4
- 2019: 96.5
- 2020: 100.0
- Exports, f.o.b.:
- 2014: 450.6
- 2015: 396.1
- 2016: 371.4
- 2017: 408.5
- 2018: 459.7
- 2019: 469.3
- 2020: 484.6
- Imports, f.o.b.:
- 2014: -363.9
- 2015: -303.7
- 2016: -284.3
- 2017: -316.0
- 2018: -361.4
- 2019: -372.8
- 2020: -384.6
- Financial account balance 4/:
- 2014: 47.3
- 2015: 51.5
- 2016: 26.0
- 2017: 49.4
- 2018: 52.7
- 2019: 53.3
- Overall balance 4/:
- 2014: 6.8
- 2015: -1.8
- 2016: 27.4
- 2017: 12.5
- 2018: 6.0
- 2019: 8.0
- Gross official reserves (US$ billions) 5/:
- 2014: 256.9
- 2015: 247.7
- 2016: 246.6
- 2017: 279.9
- 2018: 287.7
- 2019: 260.9
- 2020: 270.9
- (In months of imports) 6/:
- 2014: 6.6
- 2015: 6.7
- 2016: 6.2
- 2017: 6.1
- 2018: 5.4
- Singapore dollar/U.S. dollar exchange rate (period average):
- 2014: 1.27
- 2015: 1.37
- 2016: 1.38
- 2017: 1.35
- Real effective exchange rate (percentage change) 7/:
- 2014: -0.6
- 2015: -1.2
- Memorandum item — Nominal GDP (in billions of Singapore Dollars):
- 2014: 398.9
- 2015: 423.4
- 2016: 439.4
- 2017: 467.3
- 2018: 491.2
- 2019: 507.2
- 2020: 525.6
- Growth (%): 6.3
Notes (as presented in source)
- MAS core inflation excludes the costs of accommodation and private road transport.
- IMF staff estimates on a calendar year basis following GFSM 2014.
- Net lending/borrowing excluding net investment return contribution (NIRC).
- Following the BPM6 sign convention, a positive entry implies net outflows.
- The projections for official reserves for 2019 and onward reflect the transfers of S$45 billion from the official foreign reserves to GIC Pte. Ltd., as announced in May 8, 2019.
- In months of following year's imports of goods and services.
- Increase is an appreciation.
IMF Press Release No. 19/277 — July 15, 2019 — IMF Executive Board Concludes 2019 Article IV Consultation with Singapore
