In a country report released last week, the International Monetary Fund (IMF) called Singapore’s economic recovery from the Covid-19 pandemic one of the most impressive in the world.
However, the fund noted that recovery has also been uneven, with sectors such as tourism and construction still registering well below pre-pandemic levels.
“Singapore registered one of the most impressive recoveries from the pandemic, with economic output having surpassed pre-crisis levels at end-2021. This was spurred by the country’s strong economic fundamentals, an impressive vaccination rollout, and the authorities’ decisive policy responses,” IMF said.
The fund added that the strong recovery suggests that the country’s external position has stayed “substantially stronger than warranted by fundamentals and desirable policies,” with its considerable fiscal reserves continuing to act as buffers, but added that “a slower pace of fiscal surplus accumulation may be warranted”.
The report added, “Should downside risks materialise, fiscal policy should continue to be the first line of defence and Singapore has ample fiscal space to deploy additional policy support.”
IMF also noted in its report the rapid rise of inflation resulting in higher food, energy, private transport, and housing prices, adding that risks remain due to external factors such as Russia’s attack on Ukraine and the slowdown of growth in China.
Last month, the Monetary Authority of Singapore (MAS) raised its inflation forecast for this year from 5 per cent to 6 per cent.
Singapore is one of 2021’s top-performing advanced economies, with real GDP growth reaching 7.6 per cent and overall activity surpassing pre-Covid-19 levels, IMF noted.
However, for 2022, the country’s economic growth is expected by the IMF to be at 3.7 per cent, which is already lower than the 4 per cent it predicted last May.
IMF expects the economic outlook around the globe to continue to be a sobering one.
”It is going to be a tough 2022, and possibly an even tougher 2023, with increased risk of recession,” wrote Ms Kristalina Georgieva, IMF’s managing director, on Jul 13.
Despite IMF’s praise for Singapore’s economic performance, netizens remain concerned, especially over the high rate of inflation.
/TISG
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