Singapore mounts strong recovery but must sustain competitiveness

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After a series of external shocks over the past decade, from the Asian crisis to the bursting of the technology bubble, Singapore's economy experienced a strong turnaround starting in mid- 2003-aided by a favorable external environment, supportive macroeconomic policies, and continued structural reforms, the IMF said in its annual economic review. At the same time, sustained fiscal surpluses, an absence of external debt, healthy reserves, and large current account surpluses provided a strong buffer against exogenous shocks, the IMF Executive Board added.

Economic growth is expected to moderate in the near term, however, as global demand-particularly for electronics-softens.

The Board welcomed the authorities' resolve to continue identifying new sources of growth in an increasingly challenging regional and global environment. In recent years, the government has undertaken a wide range of structural reforms to adjust to stronger competition from lower-cost economies in the region.

These reforms have produced more wage and labor market flexibility, lower business costs and taxes, and a stronger outward expansion of Singapore firms.

Since early 2004, when signs of inflationary pressures emerged, the Monetary...