Singapore Economic Growth Remains Weak Amid High Inflation

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Singapore Economic Growth Remains Weak Amid High Inflation

Singapore's Economic Growth Remains Weak Amid High Inflation

Singapore's central bank issued a statement on Wednesday about the short-term growth remains weak. In addition, the central bank also added that its fight against inflation is still far from over.

This comes at a time when Singapore's central bank even lowered the inflation forecast for 2023. As per the MAS annual review, inflation will eventually go down due to the tight monetary policy in Singapore. However, the bank made it clear that it will not switch to growth-supporting mode for now.

Headline Inflation For May Is 4.7%

For the month of May, the headline inflation in Singapore was 4.7%, while the previous value was 5.4%. So based on this data, we can confidently say that the rate hikes have brought down inflation in Singapore.

According to MAS, the headline inflation will remain between 4.5 - 5.5% in 2023, which is lower than the previous range of 5.5 - 6.5%.

By the end of 2023, the core inflation in Singapore will likely be around 2.5 - 3.0%, while the previous forecast was 2.5%.

MAS also added that they are ready to make changes to the monetary policy if needed. In case the inflation's momentum is increased, the MAS will also take additional changes to match the pace.

During the April meeting, Singapore's central bank kept the interest rate unchanged, which was the first time in the last 2 years. At that time, the MAS cited fears of recession for its inaction.

The recent move has surprised the economists who were expecting the central bank to introduce a 6th rate hike. For now, all the eyes are now on the MAS October's meeting, where the rate hike policy will be discussed again.

If we look at Singapore's GDP growth, it would be between 0.5 - 2.5% this year, while the last year's GDP growth was 3.6%. So on that front, economic growth has downgraded significantly as the fight against inflation continues.

For the rest of 2023, the MAS is expected to raise rates again as it tries to strike a balance between recession and fighting inflation.

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