Looser monetary policy awaits Singapore in 2024: report

Experts believe inflation will fall further this year.

With inflation falling and weak economic growth, experts believe that the Monetary Authority of Singapore (MAS) is likely to loosen its monetary policy by early next year.

Research from the Institute of Chartered Accountants in England and Wales (ICAEW) showed that Singapore's economic growth will slow significantly to 0.4% in 2023, below the forecast range of 0.5% to 1.5%.

Given the soft global and domestic demand, ICAEW believes slow growth is likely to continue throughout the year, but will eventually pick up to 2.3% in 2023.

“Singapore’s GDP growth has already slowed markedly, and it is likely to remain low as both global and domestic demand soften. The Monetary Authority of Singapore (MAS) is set to react by loosening monetary policy early next year,” the report stated.

Inflation, meanwhile, has already fallen to 4.1% in July from its 7.5% peak.

ICAEW expects Singapore inflation to fall further “as import prices continue to decline and weak growth curbs underlying domestic pressures.”

“This could open the door to looser monetary policy, as the Monetary Authority of Singapore’s (MAS) measure of core inflation is likely to drop to 2.5% by the end of the year,” the report added.

Meanwhile, ICAEW also reported that Singapore’s export weakness will continue in the months to come as “growth in global trade is expected to decline as economic growth is curbed by tight monetary policy.” 

“China is unlikely to provide much offset due to the slow-down of its post-pandemic boom,” the report added.