(Oct 28): Singapore’s disinflation trajectory is “well-entrenched” and the economy’s recovery is seen extending into 2025, the central bank said in its latest review, while cautioning on growth and upside risks to prices.

Core inflation should end the year around 2% while near-term growth has been stronger than anticipated, the Monetary Authority of Singapore said in its twice-yearly macroeconomic review published Monday. MAS core inflation is expected to average around the mid-point of its 1.5-2.5% forecast range in 2025.

“The risks to Singapore’s inflation outlook are more balanced compared to three months ago,” MAS said in the report. “Significant uncertainty remains in the global economy and risks are, on balance, tilted towards lower global growth.”

MAS, which doesn’t have an explicit inflation target, left monetary settings on hold for a sixth consecutive review earlier this month, wary of stubborn price pressures. Indeed, data out last week showed Singapore’s core inflation remained elevated in September, driven by healthcare and education.

The review highlighted trade and geopolitical tensions as well as a slowing China among risks to Singapore’s economic outlook. It said that an index of trade policy uncertainty is currently at its highest level since early-2020.

“Trade tensions are on the rise and could derail the disinflation process,” the review said. “An intensification of tensions could lead to further trade frictions and potential retaliatory actions that weigh on global trade and output, while raising prices.”

MAS said, as a result, central banks may have to slow the pace of monetary policy easing amid renewed near-term inflationary pressures.

Within Asia, the resilience to China’s slowdown could also be tested if Beijing’s recent support measures fail to stabilise the deterioration in the property sector. Negative spillovers could also become more pronounced if China experiences a prolonged period of weakness, MAS warned.

Despite the downside risks, the review showed that Singapore’s economy is set to expand at “close to its potential rate,” with GDP growth for 2024 projected to come in around the upper end of the 2–3% forecast range. The momentum is likely to be sustained in 2025.

Data out this month showed Singapore’s GDP advanced 2.1% in the three months through September from the prior quarter. From a year earlier, the economy expanded at a brisk 4.1% in the period.

“Growth for the rest of 2024 and into 2025 should continue to be supported by the ongoing upswing in the global tech cycle, alongside the gradual easing of financial conditions,” the review said. “Although growth in the US and China is expected to moderate in 2025, improved prospects in the eurozone and several Asean economies should provide some countervailing support.”

Uploaded by Magessan Varatharaja