On May 16, 2024, an International Monetary Fund (IMF) team, led by economist Masahiro Nozaki, concluded its visit to Singapore, advocating for a continued tight monetary policy as the nation navigates economic recovery amid gradual disinflation. The IMF emphasized that the current stance is appropriate, but risks remain that could fuel inflation, including geopolitical conflicts and a tight labor market.

Nozaki stated that while the economy showed momentum in the latter half of 2023, supported by increased global demand for semiconductors and a tourism rebound, upside inflation risks could emerge from volatility in global energy and food prices and high wage growth. He indicated that monetary policy adjustments should follow closely behind disinflation progress and be guided by data.

The IMF projects Singapore’s GDP growth to recover to 2.1% in 2024, up from 1.1% in the previous year, driven by a sustained recovery in sectors like manufacturing and consumer services. Core inflation is expected to moderate to 3% this year, stabilizing at around 2% by 2025.

Nozaki also noted that Singapore’s Fiscal Year 2024 budget maintains a “broadly neutral fiscal stance,” complementing the tight monetary approach to achieving price stability. He praised the financial sector’s resilience and the need for ongoing macroprudential policies to manage risks effectively.

Furthermore, the IMF welcomed reforms under the Forward Singapore initiative, aimed at enhancing social safety nets and lifelong learning programs, crucial for addressing challenges linked to a rapidly aging population and promoting equitable growth.