, Singapore

Hopes fade for Singapore economy returning to the 8-9% growth levels

Stagflation looms in Singapore.

According to Deyi Tan, analyst at Morgan Stanley, Singapore is likely to see a “stagflation-type” scenario of below-trend growth and above-trend inflation.

"A combination of DM secular deleveraging, greying demography and stricter immigration policies suggest that Singapore is unlikely to sustainably return to the 8-9% growth seen in the 2004-2007 period. Inflation has also been stickier than expected amid property reflation and policy-induced high car prices," he said.

As policymaking gets more complicated in Singapore amid the unconventional policy mix in DM economies, Morgan Stanley thinks policymakers in Singapore will have to increasingly adopt a S$NEER-plus policy, i.e. currency policy and macroprudential measures.

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