IMF: Singapore may decline its competitiveness
Singapore’s plans to cut reliance on foreign workers could reduce its competitiveness and growth potential while keeping core inflation elevated, the International Monetary Fund said in a report on Saturday.
The IMF said Singapore’s plans to restructure its economy by trying to boost productivity and curb use of cheap foreign labor could eventually set the stage for a long period of sustainable growth.
“However, productivity improvements might take some time to materialize and may not fully offset the effects of declining labor force growth,” the fund said in its annual review of economic developments and policies in the country.
The Monetary Authority of Singapore this week maintained its stance of allowing a gradual appreciation of the currency to try and keep core price pressures in check.
The IMF’s executive board of directors said the country’s dependence on trade flows left it particularly vulnerable to a slowdown in the growth of trading partners as well as to global financial market volatility.
The report forecast real GDP growth for Singapore of 3.0 percent in both 2014 and 2015 and saw core inflation rising to 2.4 percent by 2015.
Source: CNBC- IMF: Singapore may decline its competitiveness
