Singapore Economic Forecast

After almost flatlining in Q1, annual GDP growth is likely accelerating slightly in Q2. Private consumption should be supported by the extra handouts for lower and middle-income households included in the FY 2023 budget. Meanwhile, in April, the Monetary Authority of Singapore (MAS) decided to pause its tightening cycle, capping the pressure on activity. In less positive news, a weaker-than-expected rebound of the Chinese economy curbed non-oil domestic exports in April. In other news, the government doubled the stamp duty for foreigners in April in a bid to cool property prices and increase affordability for current residents. Additionally, record profits posted by local banks recently amid sturdy inflows from wealthy families from abroad bode well for the financial sector.

Consumer price inflation decelerated to 5.5% in March (February: 6.3%). Food and transportation prices increased at a softer rate. Inflation will moderate this year but remain historically elevated due to strong wage growth, tight vehicle quotas and a higher goods and services tax. Housing prices are a key factor to watch.