Singapore’s growth outlook in 2023 appears uncertain amid global headwinds, the central bank said on Wednesday, but price pressures may ease as rents, a key component of inflation in the city-state, moderate in coming quarters.
The Monetary Authority of Singapore (MAS) said in a semi-annual report the economy is expected to grow between 0.5% and 2.5%, less than last year’s 3.6%, hit by contractions in trade-related sectors amid a global downturn in manufacturing.
But a key driver of inflation, the pace of residential rent increases, may moderate in the second half of the year as housing supply picks up after the pandemic, it added.
“In the quarters ahead, headline and core inflation in Singapore are expected to moderate further,” the MAS said, adding that headline inflation, which includes accommodation costs, would come in between 5.5% and 6.5% for 2023.
The moderation in rents will take time to pass through to inflation data, it said.
Already ranked among the most expensive cities in the world, Singapore has seen living costs climb to multi-year highs, sparking questions over its attractiveness as a global business hub.
Public and private residential rents have risen sharply since 2021 by 38% and 43%, respectively, government data show, mainly because of coronavirus-related disruptions in construction.
Earlier this month, the MAS kept its monetary policy unchanged after five successive rounds of tightening since October 2021, including two surprise moves in 2022.
“The prevailing monetary policy stance is sufficiently tight and appropriate for securing medium-term price stability,” it said in the report.
