The Executive Board of the International Monetary Fund (IMF) has completed its Article IV consultation with Singapore. This annual review assesses the economic and financial developments in member countries.
Singapore's economy showed a strong recovery in 2024, but recent trade tensions have slowed growth. The country's GDP increased by 4.4 percent in 2024, compared to 1.8 percent in 2023, driven by private consumption and an upswing in global technology cycles. However, a contraction of 0.6 percent was observed quarter-on-quarter in early 2025 due to slowdowns in manufacturing and wholesale trade sectors.
Inflation fell below 2 percent at the end of 2024 and continued to decrease into early 2025. The unemployment rate rose slightly from 1.9 percent in December 2024 to 2.1 percent by March 2025.
The IMF Directors praised Singapore’s resilience amid these challenges, attributing it to strong policy frameworks. They noted that growth is expected to slow while inflation remains low, with risks stemming from escalating trade tensions and tighter global financial conditions.
Directors suggested further easing of monetary policy given disinflationary pressures and slowing growth but advised that monetary policy should remain data-dependent due to uncertainties.
Regarding fiscal policies, Directors generally supported the expansionary stance of Singapore's FY2025 budget for economic activity support but emphasized maintaining external balance options and targeted support if downside risks materialize.
They also highlighted that Singapore’s external position was stronger than warranted by medium-term fundamentals, advising careful communication on this assessment due to Singapore's unique characteristics.
On financial stability, Directors agreed that the sector remains resilient with ongoing vigilance required for cross-border exposures and highly leveraged entities within commercial real estate markets.
Efforts towards promoting inclusivity through temporary financial support schemes for unemployed workers were welcomed along with initiatives supporting reskilling efforts and AI adoption by firms.
In conclusion, Directors acknowledged Singapore's significant fiscal space which could be used strategically should economic conditions worsen further.