Singapore’s Prime Minister-to-be will need to make tackling cost of living top priority, economists say

SINGAPORE: Singapore’s Prime Minister-to-be, Lawrence Wong, will need to make tackling cost of living as top priority, analysts have opined.

A recent survey by Bloomberg showed that nine of 12 economists agreed that tackling inflation should be a top priority, echoing the cost of living concerns of many Singaporeans.

With the cost of living being the biggest worry, nine out of twelve experts in the survey emphasised the need to deal with core inflation. Despite efforts by Singapore’s central bank to maintain tight monetary policies, allowing the local dollar to strengthen and mitigate imported inflation, the government has also implemented measures to cushion the impact for households.

February saw core inflation accelerate to 3.6%, surpassing the forecasted range of 2.5%-3.5% for 2024 set by the Monetary Authority of Singapore (MAS). The central bank anticipates that price pressures will remain elevated in the earlier part of the year before gradually easing through the fourth quarter and into 2025, coinciding with elections.

Following a lacklustre performance in the 2020 elections, where the ruling People’s Action Party experienced its lowest parliamentary seat count since Singapore’s inception, building rapport with both the United States and China has been highlighted as a crucial diplomatic endeavour, with a focus on enhancing trade following closely behind.

While a stronger Singapore dollar may translate to cheaper imports, it simultaneously undermines the city-state’s export competitiveness, given the significant proportion of outbound shipments relative to its economy.

Notably, Singapore’s non-oil domestic exports have seen declines in two out of the three months for which data is available this year.

Another key challenge for Mr Wong and his administration is striking a balance between providing opportunities for local workers while managing the influx of foreign labour. Nevertheless, respondents to the survey expressed confidence in the stability and continuity of policies, given the well-anticipated leadership transition. /TISG

Read also: Lawrence Wong to be sworn in as Prime Minister on May 15