Productivity gains is the only way to boost growth.
Singapore is now past the era of breakneck economic growth. Analysts at Moody’s noted in a report that Singapore’s growth unlikely to outstrip that of its Asian peers in coming quarters, although trends will remain highly volatile.
Moody’s said that the city-state’s growth is likely to hover at just 2% in the medium term, a far cry from the average growth pace of 6.2% which was achieved between 2000 and 2010.
The report noted that significant productivity gains are key to restoring robust GDP growth, as Singapore now faces the challenge of sustaining growth and raising median incomes in a spatially constrained economy with no natural resource base and a limited workforce.
“Since Singapore already enjoys higher per-capita incomes than most Aaa-rated sovereigns, stimulating labor productivity will be challenging in the absence of a meaningful expansion in the skilled workforce, or labor and product market reforms,” Moody’s said.
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