IMF Executive Board Concludes 2022 Article IV Consultation with Singapore

IMF News, July 22, 2022

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IMF Executive Board Concludes 2022 Article IV Consultation with Singapore

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Bibliographic details

• Published: July 22, 2022

Overview and recent performance

• Singapore’s containment measures, vaccination campaign and policy support helped deliver an impressive recovery in 2021.
• Real GDP growth in 2021 reached 7.6 percent; overall activity surpassed pre-COVID levels.
• Recovery was uneven: tourism-related, consumer-facing, and construction sectors remained below pre-pandemic levels.
• Unemployment declined from a peak of 3.6 percent in October 2020 to about the pre-pandemic level of 2.2 percent in March 2022.
• Inflation rose rapidly and reached 5.4 percent in April 2022, driven mostly by higher costs of private transport and housing.
• Current account surplus reached 18.1 percent of GDP in 2021, supported by robust exports.

Outlook and projections

• Near term: Growth expected to remain above potential and broaden across sectors as the economy reopens.
• Staff projection for 2022 real GDP growth: 3.7 percent.
• Headline inflation projection for 2022: about 4.8 percent, driven by rising domestic cost pressures and external factors (including the war in Ukraine and tight supply conditions).
• Current account surplus projected to decline to 13.2 percent of GDP in 2022 with recovery in domestic demand.
• Medium term: Growth expected to converge to 2.5 percent; current account surplus declining and inflation stabilizing at 1.5 percent.
• Outlook subject to significant uncertainty; downside risks include the war in Ukraine and related sanctions, China’s growth slowdown, monetary policy normalization in advanced economies, and the risk of vaccine‑resistant COVID-19 variants.

Executive Board assessment and policy guidance

• Directors commended effective pandemic management, swift vaccination rollout, and decisive policy support that produced a strong recovery.
• Key risks identified: increasing economic uncertainties, tightening global financial conditions, and inflationary pressures amplified by the war in Ukraine.
• Macroeconomic policy guidance:
  • Calibrate the pace of normalization to facilitate a broader recovery while managing price pressures and downside risks.
  • Maintain a prudent fiscal stance combined with targeted and temporary assistance to vulnerable households, workers, and firms.
  • If downside risks materialize, fiscal policy should be the first line of defense.
  • Support for a tighter monetary policy stance given upside risks to inflation; monetary policy should remain data dependent and vigilant to price developments.
  • Macroprudential stance: appropriately tightened; further actions might be needed if financial risks continue to grow.
• Structural and long-term priorities:
  • Authorities encouraged to continue ramping up housing supply to support residential price stabilization alongside macroprudential measures.
  • Continue progress implementing the 2019 FSSA recommendations and enhance the AML/CFT framework.
  • Pivot to post-pandemic transformation: accelerate efforts toward a greener, digital, and more inclusive economy; continue ambitious climate, digitalization, and inclusion initiatives.

Key statistics and selected indicators (as presented)

• Nominal GDP (2021): US$396.9 billion
• Population (2021): 5.5 million
• GDP per capita (2021): US$72,766
• Main goods exports (2021, percent of total non-oil goods exports):
  • machinery & transport equip. (61.6 percent)
  • chemical products (15.5 percent)
  • misc. manufactured articles (9.9 percent)
• Top three destinations for goods exports (2021, percent of gross goods exports):
  • China (14.8 percent)
  • Hong Kong SAR (13.1 percent)
  • USA (8.4 percent)

Selected projection table highlights (growth, percentage change)

• Real GDP: 2016: 3.6; 2017: 4.7; 2018: 3.7; 2019: 1.1; 2020: -4.1; 2021: 7.6; 2022: 2.6
• Total domestic demand 1/: 2016: 5.5; 2017: 6.1; 2018: 0.9; 2019: 2.0; 2020: -9.9; 2021: 8.9; 2022: 3.8; 2023: 2.3
• Gross capital formation 1/: 2016: 9.6; 2017: 11.0; 2018: -3.7; 2019: -0.3; 2020: -14.7; 2021: 17.7; 2022: 4.3; 2023: 0.1
• Gross national saving (percent of GDP): 2016: 44.1; 2017: 44.6; 2018: 39.9; 2019: 39.1; 2020: 39.3; 2021: 42.5; 2022: 40.0; 2023: 38.3
• Gross domestic investment (percent of GDP): 2016: 26.5; 2017: 27.3; 2018: 24.8; 2019: 24.7; 2020: 22.5; 2021: 24.4; 2022: 26.8; 2023: 25.7
• CPI inflation (period average): 2021: 2.4; 2022 (projection): 4.8
• CPI inflation, excluding food and energy 2/: -0.7; -0.1
• MAS core inflation 2/: 1.5; 3.0
• Unemployment rate: 2016: 2.1; 2021: 2.2
• Central government finances (percent of GDP) 3/:
  • Revenue: 2016: 18.3; 2017: 18.8; 2018: 17.9; 2019: 17.8; 2020: 16.9
  • Expenditure: 2016: 15.1; 2017: 14.0; 2018: 13.8; 2019: 22.1; 2020: 20.2; 2021: 16.8; 2022: 15.5
  • Net lending/borrowing: 2016: 4.1; 2017: -4.2; 2018: -1.9; 2019: 1.4
  • Net lending/borrowing, excluding nonproduced assets: -5.9; -3.8; -1.0
  • Primary balance 4/: -2.6; -1.5; -2.0; -7.6; -4.7; -3.2
• Money and credit (end of period, percent change) 5/:
  • Broad money (M2): 8.4; 4.2; 5.1; 4.4; 10.7; 9.7
  • Credit to private sector: 6.2
  • Three-month S$ SIBOR rate (percent): 1.9; 1.8
• Balance of payments (US$ billions):
  • Current account balance: 56.3; 59.4; 57.1; 54.3; 58.1; 71.9; 56.2; 56.4
  • Current account (percent of GDP): 17.6; 17.3; 15.2; 14.5; 18.1; 13.2; 12.6
  • Goods balance: 89.9; 101.0; 104.1; 98.1; 103.6; 118.2; 100.9; 111.2
  • Exports, f.o.b.: 373.2; 417.2; 460.6; 442.6; 417.8; 503.9; 610.1; 647.7
  • Imports, f.o.b.: -283.3; -316.2; -356.4; -344.5; -314.1; -385.7; -509.1; -536.5
  • Financial account balance 6/: 57.5; 32.5; 44.5; 62.5; -15.8; 8.2; 4.9
  • Overall balance 6/: -1.8; 27.4; 12.5; -8.4; 74.9; 66.2; 50.1; 51.4
  • Gross official reserves (US$ billions): 246.6; 279.9; 287.7; 279.5; 362.3; 417.9; 460.5; 519.0
  • Reserves (in months of imports) 7/: 5.9; 6.0; 6.3; 6.5; 7.1; 6.6; 7.0
• Singapore dollar/U.S. dollar exchange rate (period average): 1.38; 1.35; 1.36; 1.34
• Nominal effective exchange rate (percentage change) 8/: -2.4
• Real effective exchange rate (percentage change) 8/: -6.0; -9.4; 4.6; -25.1
• Memorandum: Nominal GDP (in billions of Singapore Dollars): 440.5; 473.9; 508.5; 512.2; 476.4; 533.4; 581.0; 610.9
• Memorandum growth (%): 7.3; 0.7; -7.0; 12.0

Note: Data and forecasts as of May 24, 2022. Footnotes and methodological notes in original table apply (see IMF staff estimates and projections, MAS core inflation definition, GFSM 2014 basis, BPM6 sign convention, and data reporting break in July 2022).

Press Release No. 22/269.

References

• https://www.imf.org/-/media/images/imf/bios/imfboard.jpg
• The Executive Board
• Singapore and the IMF
• IMF Policy Advice -- A Factsheet
• Press Releases
• PRESS CENTER
• http://www.IMF.org/external/np/sec/misc/qualifiers.htm
• https://www.imf.org/en/home