The Monetary Authority of Singapore (MAS) has unveiled its final estimate for the third quarter of 2023, reporting a 0.7% expansion in gross domestic product (GDP). This growth comes after a 0.1% expansion in the second quarter, allowing Singapore’s economy to narrowly avoid recession. However, amidst the uncertain global economic climate, near-term economic trends remain uncertain.
In its semi-annual macroeconomic review report, MAS expressed the view that the Singaporean economy is likely to face a period of stagnation in the coming months. The unpredictability of the global economy has added an element of caution, with the expectation that the domestic economy will gradually regain momentum in the latter half of 2024. This resurgence is anticipated to be underpinned by the recovery of the global technology sector.
MAS also provided insights into Singapore’s inflation outlook. The central bank foresees a marginal improvement in the inflation rate before it begins to taper off to an average level of 2.5-3.5% in 2024. Notably, Core Inflation, which excludes costs associated with land travel and accommodation in Singapore, decelerated to 3% in September. This follows a high of 5.5% in January, which marked the highest inflation rate in 14 years.
Despite the abatement in inflation, MAS remains watchful of potential inflationary pressures. The rapid ascent of global food and energy prices presents a concern that could subject Singapore to inflationary strains.
On October 13th, the MAS Board of Directors decided to maintain the current monetary policy framework. Singapore’s central bank typically conducts monetary policy through the management of an exchange rate framework, instead of making adjustments to interest rates. This framework encompasses three key aspects: the Slope, the Mid-Point, and the Width of the specified exchange rate framework, commonly referred to as the Nominal Effective Exchange Rate (NEER).
The economic landscape for Singapore remains subject to the global economic climate, with authorities closely monitoring developments and taking prudent measures to navigate the uncertain times ahead.