## IMF Staff Completes 2024 Article IV Mission to Singapore

_IMF News, May 16, 2024_

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## Bibliographic details
- Published: May 16, 2024

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### Overview and recent performance
- Mission dates: May 7–16, 2024.
- Press release: Press Release No. 24/166, May 16, 2024.
- Summary assessment: Singapore’s economy is recovering, driven mainly by strengthening external demand; gradual disinflation is underway, with risks to inflation tilted to the upside.
- Labor market: Conditions started to ease last year amid weaker GDP growth; nominal wage growth slowed in Q4 2023, but unemployment remains low.

### Growth outlook and key projections
- IMF staff projects GDP growth to recover to 2.1 percent in 2024 from 1.1 percent in last year.
- Growth drivers: continued recovery in manufacturing, tourism, and consumer-facing services.
- Risks to the growth outlook:
  - Steeper than projected slowdown in China.
  - Prolonged tight US monetary policy.
  - Deeper geoeconomic fragmentation.
  - Stronger global growth would have positive spillovers to Singapore.

### Inflation, disinflation, and monetary policy
- MAS core inflation (excluding accommodation and private transport) decreased to 3.1 percent in March 2024.
- IMF staff projects headline and MAS core inflation to moderate to 3 percent in this year.
- IMF staff expects MAS core inflation to stabilize at around 2 percent by 2025.
- Monetary policy guidance and risks:
  - Current stance: appropriately tight and geared towards continued disinflation.
  - Recommendation: Monetary policy should remain tight until inflationary pressures firmly recede.
  - Once disinflation is firmly in sight, monetary policy should be adjusted in a timely manner, guided by data and clearly communicated.
  - Upside inflation risks highlighted:
    - Intensification of geopolitical conflicts could increase volatility in global energy and food prices.
    - Still tight labor market and accumulated cost pressures from high past wage growth could lead to continued inflation stickiness, particularly for services.

### Fiscal policy and public finances
- FY2024 fiscal stance: broadly neutral, as implied by the FY2024 budget, with targeted support to vulnerable households and firms.
- Assessment: Broadly neutral fiscal stance is appropriate and expected to complement tight monetary policy toward achieving price stability.
- Fiscal strength and challenges:
  - Singapore has strong public finance and fiscal institutions anchored by the balanced budget rule.
  - Well positioned to address future downside risks and medium- and long-run spending needs from rapid ageing, the need to raise productivity, and climate-change risks.

### Financial sector resilience and risks
- General assessment: Financial sector remains sound, supported by solid capital and liquidity buffers.
- Recommendations to maintain resilience:
  - Continued maintenance of adequate provisioning buffers.
  - Rigorous stress testing.
  - Prudent risk management practices across banks.
- Non-bank financial institutions: Have weathered a rise in interest rates well.
- Vulnerabilities and macroprudential stance:
  - A sudden downward adjustment in housing prices could pose a systemic risk for the financial sector.
  - Pockets of vulnerabilities could emerge during stress episodes.
  - The tight macroprudential policy stance remains appropriate; continued vigilance is warranted.

### Structural reforms and policy initiatives
- Forward Singapore initiative: Welcomed by the IMF team.
- Reforms envisaged under Forward Singapore highlighted by the IMF team:
  - Strengthening social safety nets.
  - Strengthening healthcare and pension systems.
  - Expanding lifelong learning programs.
  - Promoting inclusive growth amid rapid population ageing and technological advancements, including in Artificial Intelligence.
- Climate policy: IMF team welcomes robust climate policies implemented in Singapore.

*IMF Staff Completes 2024 Article IV Mission to Singapore. Press Release No. 24/166, May 16, 2024.*

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## References

- [Singapore and the IMF](http://www.imf.org/external/country/SGP/index.htm)
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_Source: https://www.imf.org/en/news/articles/2024/05/16/pr24166-singapore-imf-staff-completes-2024-article-iv-mission_