Singapore: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Singapore, focusing on the nation’s economic recovery and current challenges. Singapores economy demonstrated a robust recovery in 2024 but has faced a slowdown due to recent trade tensions. Growth climbed to 4.4 percent in 2024 from 1.8 percent in 2023, driven by strong private consumption and an upswing in the global technology cycle. However, the GDP contracted by 0.6 percent quarter-on-quarter on a seasonally-adjusted basis in the first quarter of 2025, amid increased trade tensions and global policy uncertainty, impacting externally-oriented sectors such as manufacturing and wholesale trade.
According to the International Monetary Fund, disinflation continued with inflation dropping below 2 percent by the end of 2024 and further in early 2025, aided by lower inflation in tradable and non-tradable prices. The labor market, although tight, began to normalize in 2024, with recent signs of weakening as the unemployment rate rose from 1.9 percent in December 2024 to 2.1 percent in March 2025. Singapore’s current account surplus decreased slightly from 17.7 percent of GDP in 2023 to 17.5 percent in 2024 due to a decline in the goods surplus.
The banking system in Singapore remains well-capitalized, with a capital adequacy ratio of 18.9 percent in the first quarter of 2025. Banks have maintained profitability and strong liquidity positions, meeting the minimum requirements for liquidity coverage and net stable funding ratios. Investment funds have managed investor redemption requests orderly during periods of market volatility in August 2024 and April 2025.
The IMF Directors generally agreed that the expansionary fiscal stance in the FY2025 budget would support economic activity. However, some Directors highlighted the need for fiscal measures to support external rebalancing. Directors emphasized that Singapore has substantial fiscal space to provide temporary and targeted support if downside growth risks occur. They also advised accommodating rising medium-term spending needs by reducing the fiscal surplus and increasing infrastructure spending.
The IMF assessed that Singapore’s external position in 2024 was stronger than warranted by medium-term fundamentals. Directors noted that Singapore’s unique characteristics could create uncertainty around external balance assessments. They projected that the current account surpluses would moderate over the medium term due to factors such as population ageing and increased public spending. Directors encouraged continued efforts to enhance public investment and strengthen social safety nets to reduce large external surpluses.
Directors agreed that Singapore’s financial sector remains resilient, with macroprudential policies preventing housing-related systemic risks. They stressed the need for vigilance on vulnerabilities from cross-border exposures and leveraged corporates. Directors welcomed efforts to bolster stress testing and contingency planning, alongside strengthening the AML/CFT framework.
Efforts to promote a more inclusive economy were acknowledged, including a temporary financial support scheme for involuntarily unemployed workers. Reskilling workers, encouraging firms to adopt AI technologies, and investing in climate-resilient infrastructure were highlighted as crucial steps for Singapore’s economic resilience and growth.