Jul 31, 2017

IMF Executive Board Concludes 2017 Article IV Consultation with S'pore

The Executive Board of the International Monetary Fund (IMF) concluded the 2017 Article IV consultation[1] with Singapore, and considered and endorsed the staff appraisal without a meeting on a lapse-of-time basis.

Singapore’s economic growth momentum has improved since late 2016, supported by a recovery in global electronics trade. Real GDP grew by 2.7 percent in the first quarter of 2017 (year-on-year). However, the recovery has not yet been broad based and private domestic demand, particularly private investment, remains subdued.

Labor market conditions have softened with two consecutive years of weak net employment generation, although wages have increased and income inequality, as measured by the Gini coefficient, has declined. Following higher energy and utility prices, consumer price inflation turned positive after nearly two years of negative readings. The current account surplus, as a percent of GDP, has remained elevated.

Faced with structural shifts abroad and at home, including a rapid population aging, Singapore is pursuing an ambitious technology-driven, innovation-based growth model for the future. A high-level Committee on the Future Economy has recommended transforming Singapore into “pioneers of the next generation” through increased global integration, digitalization, and further enhancement in enterprise capabilities and worker skills.

However, considerable uncertainties remain. Against this backdrop, Singapore’s growth is projected in a 2½–3 percent range over the medium term, with the growth rates rising as improvements in productivity take hold. In the near term, real GDP will grow by about 2¼ percent in 2017 and 2½ percent in 2018.

Private domestic demand will provide greater support to growth, contributing to a rise in inflation to 1–1½ percent average rate by 2018. Risks to the near-term growth outlook stem mainly from external sources.