, Singapore

Economic restructuring to bring abrupt surge in financial market volatility in the next few years

Expect plenty of spillovers in the housing market.

Singapore’s medium term outlook will be dependent on success of economic restructuring program and policy responses to the rapid pace of population ageing.

According to IMF, key risks include external risks related to a protracted period of slower growth in advanced and emerging economies, a continued build up and eventual unwinding of excess capacity in China, an abrupt surge in financial market volatility, and geopolitical risks.

Tips potential GDP growth to slow in the next few years on slower labor force expansion, and then recover gradually amid faster productivity growth to reach 3.25% in medium term.

IMF also stressed need for continued vigilance towards risks and spillovers in the financial and housing sectors, as well as further efforts to promote external rebalancing, address demographic challenges and reduce inequality. IMF forecasts 2014 and 2015 growth at 3% each, with headline and core inflation at 1.4% and 2.3% (2014) and 2.5% and 2.4% (2015) respectively.

IMF expects core inflation to average 2.4% for 2014-2015, reflecting relative price adjustments to facilitate the ongoing economic restructuring.
 

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