Title page
Contents
PRESS RELEASE - PR23/295 2
STAFF REPORT FOR THE 2023 ARTICLE IV CONSULTATION 5
CONTEXT: A STRONG POST-PANDEMIC RECOVERY AMID ELEVATED PRICE PRESSURES 9
RECENT DEVELOPMENTS: A STRONG RECOVERY DAMPENED BY EXTERNAL HEADWINDS 9
OUTLOOK AND RISKS: SUBPAR GROWTH WITH INFLATION INERTIA 18
POLICIES TO MANAGE PRICE PRESSURES AND NURTURE GROWTH 20
A. Near-Term Policy Mix: A Tightening Stance Across All Policy Levers 20
B. Fiscal Policy: A Gradual Tightening to Help Reduce Price Pressures with Temporary and Targeted Support to the Vulnerable While Preserving Market Signals 21
C. Monetary and Financial Sector Policies: Restoring Price Stability While Facilitating a Soft Landing and Safeguarding Financial Stability 23
D. Fostering a Greener, Smarter, and More Inclusive Economy, with More Agile Post-COVID-19 Labor Market Policies 31
STAFF APPRAISAL 34
Appendix I. External Sector Assessment 55
Appendix II. Risk Assessment Matrix 57
Appendix III. Staff Policy Advice from the 2021 and 2022 Article IV Consultations 59
Appendix IV. Sovereign Risk and Debt Sustainability Analysis 61
Appendix V. Status of Main Recommendations of the 2019 FSSA 67
Appendix VI. Geoeconomic Fragmentation and Implications for Singapore 71
Appendix VII. Impact Of The Pandemic And Work From Home Trends On Singapore's Labor 89
STAFF REPORT FOR THE 2023 ARTICLE IV CONSULTATION-INFORMATIONAL ANNEX 101
FUND RELATIONS 102
STATISTICAL ISSUES 104
Statement by the Staff Representative on Singapore August 23, 2023 106
Statement by Yati Kurniati, Executive Director for Singapore, and Justin Lee, Advisor to the Executive Director August 23, 2023 107
Text Table 1. Singapore: Financial System Structure in Singapore, 2021 14
Text Table 2. Singapore: Property-Related Measures 17
Text Table 3. Singapore: Key Aspects of MAS IWST 2022 Climate Scenarios 31
Table 1. Singapore: Selected Economic and Financial Indicators, 2017-24 47
Table 2. Singapore: Balance of Payments, 2017-24 48
Table 3. Singapore: Monetary Survey, 2017-24 49
Table 4. Singapore: Indicators of Vulnerability, 2017-2022 50
Table 5. Singapore: Medium-Term Scenario, 2017-28 51
Table 6. Singapore: Summary of Government Operations and Stock Positions, FY2017-FY2023 52
Table 7. Singapore: Financial Soundness Indicators, 2018-22Q3 53
Table 8. Singapore: International Investment Position, 2016-22 54
Figure 1. Singapore: Real Sector Developments 36
Figure 2. Singapore: External Sector 37
Figure 3. Singapore: Labor Market Developments 38
Figure 4. Singapore: Inflation Developments 39
Figure 5. Singapore: Monetary and Financial Sector Developments 40
Figure 6. Singapore: Banking Sector Developments 41
Figure 7. Singapore: Housing Market Developments 42
Figure 8. Singapore: Spillovers 44
Figure 9. Singapore: Demographic Transition 45
Figure 10. Singapore: Social and Equality Indicators 46
Boxes
Box 1. Singapore: Judicious Use of Fiscal Buffers Under Downside Risks 22
Box 2. Singapore: US Dollar Funding 26
Appendix VI. Geoeconomic Fragmentation and Implications for Singapore 78
Table 1. Singapore: Geopolitical Tension and FDI Inflows 78
Appendix VII. Impact Of The Pandemic And Work From Home Trends On Singapore's Labor 97
Table 1. Singapore: Drivers of Amenity Value to Work from Home in Singapore 97
Table 2. Singapore: Drivers of Amenity Value to Work from Home in United States 98
Table 3. Singapore: Drivers of Amenity Value to Work from Home in Asia 99
Figure 1. Singapore: Risk of Sovereign Stress 61
Figure 2. Singapore: Debt Coverage and Disclosures 62
Figure 3. Singapore: Public Debt Structure Indicators 63
Figure 4. Singapore: Baseline Scenario 64
Figure 5. Singapore: Realism of Baseline Assumptions 65
Figure 6. Singapore: Medium-Term Risk Analysis 66
Appendix VI. Geoeconomic Fragmentation and Implications for Singapore 72
Figure 1. Singapore: Early Signs of Geo-Economic Fragmentation 72
Figure 2. Singapore: Long-Term Output Losses from Global Trade Fragmentation 73
Figure 3. Singapore: Trade Linkage and Trade Integration 75
Figure 4. Singapore: Financial Linkages 75
Figure 5. Singapore: Long-Term GDP Losses in Fragmentation Scenarios 76
Figure 6. Singapore: Geopolitical Distance and Bilateral Portfolio Flows - Cumulative Impulse Response 80
Appendix VII. Impact Of The Pandemic And Work From Home Trends On Singapore's Labor 95
Figure 1. Singapore: Post-Pandemic Labor Market and Work from Home Trends in Singapore 95
Figure 2. Singapore: Older Workers in the Labor Force 96
Figure 3. Singapore: Work from Home and Productivity 96
Annex Tables
Annex I. Technical Annex-Key Features of the Multi-Sector Computable General Equilibrium (CGE) Trade Model 83
Table 1. Singapore: Technological Intensity and Elasticities Across Sectors 83
Annex II. How Do US Multinationals Respond to Geopolitical Tensions 85
Table 1. Singapore: Activity of US Multinationals Following Geopolitical Shocks 85
Annex Figures
Figure 1. Singapore: Estimated Sectoral Elasticities of Substitution 82