Singapore way behind in inflation control
Singapore gets lumped with India and Indonesia as "three main laggards" in moderating inflation, says RBS.
The island nation has deliberately failed to rein in inflation, as the government focuses more on reducing foreign worker numbers and encouraging the training of local Singaporeans to eventually fill in those vacant jobs.
Here's more from RBS:
Our analysis shows that India, Indonesia and Singapore are the three main laggards to the regional trend of moderating inflation largely due to idiosyncratic factors.
Singapore's inflation dynamics are probably more unique. They are predominantly related to the government's decision to reduce the dependency on low earning foreign workers by both lowering administrative ceilings on foreign worker dependency ratios and increasing levies. In Singapore, employers are required to pay an administrative levy to the government for hiring foreign workers.
In India, Rupee depreciation has slowed the pace of correction in inflation even though growth has come off sharply. For example, oil prices in local currency terms have remained elevated relative to dollar denominated prices. This inconsistency should even out as the currency stabilises. Moreover, the fall in international crude prices will reduce the degree of domestic price adjustment, most likely due in June.
Indonesia's slow decline is more simply related to the persistence of strong domestic demand conditions.