The Monetary Authority of Singapore building.
Wei Leng Zheng | Bloomberg | Getty Images
Singapore’s central bank warned on Wednesday that the near-term growth outlook for one of Asia’s top financial centers “remains uncertain with downside risks” despite the fallout from the monetary tightening cycle favoring cooling inflation.
Singapore’s near-term economic growth will remain subdued due to a bleak outlook, but inflation should remain low, Monetary Authority of Singapore (MAS) Chairman Ravi Menon said in the MAS’s annual review on Wednesday. fell towards the end of the year, even as he emphasized that efforts to curb inflation continued. it’s not finished yet.
The MAS now forecasts headline inflation of 4.5% to 5.5% in 2023, down from a previous forecast of 5.5% to 6.5%, Menon told a news conference.
He added that core inflation would come down sharply to 2.5% to 3.0%.
Gross domestic product growth this year will be at the midpoint of an expected range of 0.5% to 2.5%, down from 3.6% in 2022, chairman Tharman Tharman said in a note.
He said the central bank’s monetary policy remained “unwavering in its focus on medium-term price stability”.
If potential vulnerabilities emerge in the global financial system in the coming months, consumer and investor confidence could take a further hit.
Monetary Authority of Singapore
MAS abandons monetary policy setting constant It appeared in April for the first time in two years, reflecting concerns about Singapore’s growth prospects.city-state economy contracted The first quarter sparked fears of a recession.
The move surprised economists, who had expected a sixth straight round of tightening, including two non-cyclical tightening moves in 2022.
Singapore also has the ability to raise sales tax in 2024 if inflation falls to 2.5% to 3% in the final quarter of this year, Menon said.
He said the central bank’s sequential tightening of monetary policy was reflected in a net loss of S$30.8 billion, or US$22.81 billion, in the 2022-2023 fiscal year.
In its annual report, the MAS said inflation has been on a “generally moderating trajectory”, falling to 4.7% in May from 5.4% in the first quarter of this year.
The report said that Singapore is facing the impact of global economic development, and the situation remains uncertain in the short term.
“Should potential vulnerabilities emerge in the global financial system in the coming months, consumer and investor confidence could be further hit, with adverse consequences for the wider economy,” the MAS said.