Front Matter Page
IMF Country Report No. 18/245
SINGAPORE
2018 ARTICLE IV CONSULTATION-PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR SINGAPORE
July 2018
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2018 Article IV consultation with Singapore, the following documents have been released and are included in this package:
A Press Release summarizing the views of the Executive Board as expressed during its July 20, 2018 consideration of the staff report that concluded the Article IV consultation with Singapore.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on July 20, 2018, following discussions that ended on May 15, 2018, with the officials of Singapore on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on July 3, 2018.
An Informational Annex prepared by the IMF staff.
A Statement by the Executive Director for Singapore.
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
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© 2018 International Monetary Fund
Front Matter Page
SINGAPORE
STAFF REPORT FOR THE 2018 ARTICLE IV CONSULTATION
July 3, 2018
Key Issues
Outlook and risks. Singapore’s economy is on a strong cyclical upswing. Economic growth has recovered to a three-year high, led by externally-oriented sectors that benefitted from the synchronized global expansion. Economic momentum is becoming more broad-based, helping to reduce the labor market slack. Growth is expected at or above the potential rate in the near term, increasingly supported by domestic demand. Inflation is subdued but expected to rise modestly. The current account surplus, as a share of GDP, has remained large. Risks to the near-term outlook are broadly balanced and come mainly from external sources. Over the medium term, the structural transformation aimed to prepare Singapore for challenges from technological changes globally and population aging at home should help support higher productivity.
Macroeconomic and financial sector policies. Macroeconomic policies are being recalibrated to reflect the cyclical strength of the economy while considering risks to the near-term outlook. Normalization of monetary policy began in April but policy remains accommodative and further tightening may be in order. Fiscal policy overperformed but a fiscal stimulus is planned under the FY2018/19 budget. The easing of fiscal policy will help to address medium-term infrastructure needs and is welcome. In response to downside risks, Singapore should use its ample fiscal space to provide a first line of defense with monetary policy playing a supportive role. The choice of medium-term fiscal options to finance infrastructure and aging-related healthcare should embody equity and efficiency considerations, both within and across generations. Financial sector and macroprudential policies have bolstered the resilience of the banking sector. Private sector leverage has stabilized but remains elevated. Property market measures should continue to focus on both demand and supply issues. Addressing financial sector risks, including from new financial technologies, requires vigilance and a strong regulatory framework.
Structural transformation. A restructuring of the economy is underway to embrace digital technologies and automation, while deepening skills and capabilities, becoming more inclusive, and further integrating with the rest of the world. Policies should facilitate the entry of new, dynamic firms; encourage training, reskilling, and lifelong learning for workers; promote an innovation ecosystem; collaborate with all stakeholders; and adopt broader social insurance arrangements.
Approved By
Odd Per Brekk (APD) and Martin Kaufman (SPR)
This report was prepared by a staff team led by Alex Mourmouras and Yuko Kinoshita. Discussions were held in Singapore during May 3–15, 2018. The mission comprised Alex Mourmouras (Head), Yuko Kinoshita, Souvik Gupta, Jiae Yoo (all APD), Jochen Schmittmann (Resident Representative), Adrian Alter (MCM), and Tristan Walker (ILU). Juda Agung and Chengyi Ong (both OED) participated in the policy discussions. Yun He and Justin Flinner (both APD), and Adeline Yeo (Singapore office) assisted in the research and preparation of this report. Presentation of historical data and staff’s macroeconomic projections are based on information available as of June 26, 2018.
Contents
Abbreviations and Acronyms
CONTEXT
ECONOMIC DEVELOPMENTS, OUTLOOK, AND RISKS
POLICY DISCUSSIONS
A. Monetary Policy
B. Fiscal Policy
C. Financial Sector Issues
D. Structural Policies
STAFF APPRAISAL
BOX
1. Rising Investment in Intangible Assets
2. Financial Conditions and Growth-at-Risk in Singapore
3. The Role of Industry Transformation Maps in Creating the Future Economy
FIGURES
1. Real Sector Developments
2. Labor Market Developments
3. Monetary and Financial Sector Developments
4. Banking Sector Developments
5. Housing Market Developments
6. External Sector
7. Spillovers
8. Social and Equality Indicators
9. Demographic Transition
TABLES
1. Selected Economic and Financial Indicators, 2013–19
2. Balance of Payments, 2013–19
3. Monetary Survey, 2013–19
4. Indicators of Vulnerability, 2013–18Q1
5. Medium-Term Scenario, 2013–23
6. Summary of Government Operations and Stock Positions, 2012/13–2018/19
7. Financial Soundness Indicators—Local Banking Sector, 2013–2017Q3
8. International Investment Position, 2013–17
APPENDICES
I. Recent Labor Market Developments
II. External Sector Report
III. Financial Conditions and Growth-at-Risk in Singapore
IV. Risk Assessment Matrix
V. Estimating a Monetary Policy Rule
VI. Public Debt Sustainability Analysis
VII. Housing Market Development and Policies
VIII. Fintech Opportunities and Challenges
Abbreviations and Acronyms
| ACIP |
AML/CFT Industry Partnership |
| AML/CFT |
Anti-money laundering/countering the financing of terrorism |
| ASEAN |
Association of Southeast Asian Nations |
| CA |
Current account |
| CFE |
Committee on the Future Economy |
| CSIP |
Council for Skills, Innovation, and Productivity |
| FCI |
Financial Conditions Index |
| Fintech |
Financial technology |
| FX |
Foreign exchange |
| FY |
Fiscal year |
| FSAP |
Financial Stability Assessment Program |
| GaR |
Growth-at-Risk |
| GDP |
Gross domestic product |
| GFSM |
Government Finance Statistics manual |
| GPT |
General-purpose technology |
| GST |
Goods and Services Tax |
| IP |
Intellectual property |
| IPP |
Intellectual property product |
| ITM |
Industry Transformation Map |
| LTV |
Loan to value |
| MAS |
Monetary Authority of Singapore |
| ML/TF |
Money laundering/terrorist financing |
| NEER |
Nominal effective exchange rate |
| NIRC |
Net Investment Returns Contribution |
| NPL |
Nonperforming loan |
| R&D |
Research and development |
| S$ |
Singapore dollar |
| TDSR |
Total debt service ratio |
| US |
United States, the |
| US$ |
U.S. dollar |
| y/y |
Year-on-year |
Front Matter Page
SINGAPORE
STAFF REPORT FOR THE 2018 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
July 3, 2018
Prepared By
Asia and Pacific Department
Contents
FUND RELATIONS
STATISTICAL ISSUES
Front Matter Page
Press Release No. 18/316
FOR IMMEDIATE RELEASE
July 27, 2018
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