ISTANBUL

Singapore's real gross domestic product (GDP) growth is expected at 2.1% this year and 2.3% next year, according to the International Monetary Fund (IMF) on Wednesday.

While Singapore continues to follow a path of gradual recovery, its economic growth moderated to 1.1% in 2023, mainly due to a contraction in its manufacturing sector in the first half of last year, originating from the downturn in the global electronics cycle, the IMF said.

Economic growth started to recover in the second half of 2023, reflecting improved global demand for semiconductors, while it strengthened further to 2.7% in the first quarter of this year, supported by strong inbound tourism, it added.

"Gradual disinflation is expected to continue. Headline inflation declined to 2.7 percent in April 2024, and MAS core inflation (which excludes costs of accommodation and private transport but includes food and energy prices) decreased to 3.1 percent in April 2024, supported by disinflation in food and tradable goods," the IMF said in its Staff Concluding Statement of the 2024 Article IV Mission.

The IMF, however, noted that signs of persistence in services inflation remain, while two-year ahead inflation expectations based on consensus forecasts have been anchored at around 1.8%.

The financial agency said Singapore's current account surplus increased, led by an improvement in its primary income balance, and its banking sector continues to demonstrate "ample capital buffers, sound asset quality, high profitability, and a comfortable liquidity position."

"Non-bank financial institutions, mainly comprising investment funds and insurers, have weathered stresses from the high interest rates well. High borrowing costs encouraged the nonfinancial corporate sector and households to deleverage, while the housing market cooled down moderately in 2023," it added.