Image: Dr David Sing /


SINGAPORE, October 5, 2023 – Weighed down by a weakening global economy, the Singapore economy is expected to grow at a moderate pace in 2023. With inflation moderating but still likely to be elevated in the near term, maintaining the tight monetary policy stance is critical to anchor inflationary expectations while the government provides targeted fiscal support to alleviate the increase in the cost of living.

These conclusions are highlighted in the 2023 Annual Consultation Report on Singapore published by the ASEAN+3 Macroeconomic Research Office (AMRO) today. The report was based on AMRO’s Annual Consultation Visit to Singapore from May 9—June 5, 2023, and data and information available up to June 16, 2023.

Economic developments and outlook

Singapore’s economy slowed sharply from 3.6 percent in 2022 to 0.4 percent (yoy) in Q1 this year driven by a sharp decline in manufacturing output. The manufacturing sector contracted by 5.4 percent (yoy) in Q1, reflecting a cyclical downturn in the electronic cycle. The service sector remained strong, thanks to the return of tourists and relatively resilient private consumption. The construction sector continued to recover as the return of foreign workers, following the reopening, eased the supply constraint.

Inflation came in at 6.1 percent in 2022, on the back of high energy and food prices and higher costs of transportation and accommodation. Although inflation has moderated in recent months, it is expected to remain elevated in the near term, as service inflation has been gaining momentum in recent months, reflecting a relatively tight labor market.

After growing at 12.1 percent in 2021, non-oil domestic exports slowed to 3 percent in 2022, driven by a slowdown in the growth of both electronics and non-electronics exports. Services exports, on the other hand, continued to grow robustly, boosted mainly by higher receipts from transport and travel services.

Amid heightened inflationary pressure and rising global interest rates, Singapore’s monetary policy was on a tightening trajectory in 2022 before taking a pause in April this year amid concerns over the weakening economy. Meanwhile, domestic interest rates have been trending upwards in tandem with global interest rates.

The revised FY2022 fiscal position improved slightly relative to the estimated position, mainly due to higher-than-expected operating revenue. The FY2023 budget shows a tighter fiscal stance—the deficit is expected to narrow to 0.1 percent of GDP from 0.3 percent a year ago—reflecting the government’s anticipation of growing expenditure needs in the medium to long term, amid inflationary concerns and aging population.

Risks, vulnerabilities, and challenges

The overall balance of risks is tilted to the downside, with a gloomier global growth outlook being one of the major risks in the coming quarters. While the reopening of China had initially provided a much-needed boost to global demand, it will unlikely be sufficient to offset the impact of the tighter financial conditions in major economies on global growth, which will weigh heavily on Singapore’s manufacturing exports.

Elevated price pressure poses another challenge in the near term. A sharp rise in commodity prices looms as a key external risk amid heightening geopolitical tensions and the El Nino weather condition, while car ownership fees, accommodation costs, wage pressure, and GST hikes warrant monitoring on the domestic front.

On the financial front, spikes in capital flow volatility are a key risk for Singapore. Meanwhile, most households and firms remain resilient to an increase in loan rates, although risks for a small segment of highly leveraged households and firms have heightened amid higher interest rates.

Over the longer term, Singapore will need to contend with challenges arising from an aging population and climate change.

Policy recommendations

The revenue measures in the FY2023 budget are commendable, and AMRO encourages the authorities to explore additional revenue sources to meet rising longer-term spending needs while adhering to the fiscal rule of running a balanced budget within each term of government.

AMRO supports the Monetary Authority of Singapore’s tightening of monetary policy to maintain price stability. Meanwhile, a concerted effort, involving monetary and other policy instruments, should be made to tame inflation, particularly when the inflationary pressure is being driven by a wide range of supply and demand factors, including domestic policy measures.

AMRO supports the current macroprudential measures to cool the property market. The recent rounds of cooling measures have reduced the risk of a destabilizing correction. Continued vigilance on property market developments is essential, as are efforts to boost private and public housing supply.

AMRO supports the authorities’ continued efforts to develop a responsible and innovative digital asset ecosystem. The efforts to strengthen digital infrastructure will foster collaboration between fintech companies and other businesses and help promote greater interoperability across platforms and countries. AMRO also welcomes the authorities’ initiatives to mobilize private capital to catalyze the region’s transition toward a low carbon economy.


About AMRO

The ASEAN+3 Macroeconomic Research Office (AMRO) is an international organization established to contribute towards securing macroeconomic and financial resilience and stability of the ASEAN+3 region, comprising 10 members of the Association of Southeast Asian Nations (ASEAN) and China; Hong Kong, China; Japan; and Korea. AMRO’s mandate is to conduct macroeconomic surveillance, support regional financial arrangements, and provide technical assistance to the members. In addition, AMRO also serves as a regional knowledge hub and provides support to ASEAN+3 financial cooperation.