Singapore Chartbook: Slower growth, higher inflation
- Growth will normalise to 3.5%, but remain supported by further reopening efforts
- Manufacturing growth will be slower but services sector to help to pick up some of the slack
- Inflation will be the key risk in 2022 amid rising global price pressure
- Our forecasts of 3.8% for headline CPI inflation and 3.0% for core inflation remain unchanged
- The Monetary Authority of Singapore (MAS) is expected to tighten monetary policy again
Inflation will be the key risk in 2022 amid risng global price pressure. A strong global recovery, supply-side bottlenecks and more recently, the Ukraine-Russia war, have driven global commodity prices significantly higher. Such elevated imported inflation will spill over into Singapore’s domestic price dynamics. Juxtaposed with an already tight labour market and an increasingly positive output gap, domestic inflationary pressure will remain high throughout 2022. This could likely prompt further monetary tightening by the MAS in a bid to anchore inflation expectation.
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