Washington, DC: On July 15, 2026, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Singapore.[1]
Singapore is navigating another year of elevated global uncertainty. Most notably, the war in the Middle East has transmitted to the economy through an energy shock. Nonetheless, Singapore enters this period of heightened uncertainty from a position of strength. Growth reached 5.0 percent in 2025, with semiconductor production and exports buoyed by the AI-related global technology upcycle, while private consumption and investment were supported by healthy wage growth. In 2026Q1, annualized q/q GDP expanded by 5.3 percent, reflecting continued AI-related semiconductor demand and ongoing infrastructure projects. A sharp increase in global energy prices following the war in the Middle East has led to a moderate increase in inflation in Singapore, with headline inflation rising to 1.8 percent in April 2026. Inflation expectations, based on consensus forecasts, have remained well-anchored to date.
The unemployment rate remained low at 2.0 percent in 2025, broadly unchanged from 2024, but labor demand showed signs of moderation in 2026Q1. Singapore recorded a current account surplus of 16.7 percent of GDP in 2025, down from 17.2 percent in 2024 and below the average of 17.6 percent over the decade from 2015–24. The banking system is well-capitalized, with the capital adequacy ratio at 18.5 percent in 2025Q2. Liquidity coverage ratios of Domestic Systemically Important Banks remain firmly above 100 percent in 2025. Asset quality remains strong, with the non-performing loan ratio at 1.1 percent in 2025Q2. Banks’ profitability has been supported by higher non-interest income.
Executive Board Assessment[2]
Executive Directors welcomed Singapore’s continued economic resilience in the face of elevated global uncertainties, supported by strong fundamentals, prudent policies, and ample buffers. They noted, however, that growth is expected to moderate amid downside risks from geopolitical tensions, trade fragmentation, and a potential correction in AI-related investment, while inflation risks remain tilted to the upside owing to higher energy prices. Against this background, Directors underscored the importance of continuing well-calibrated and agile policies to navigate external challenges and support inclusive growth.
Directors agreed that the current monetary policy stance is appropriate in the near term, given the positive output gap, a gradually normalizing but still tight labor market, and the need to keep inflation expectations anchored. In view of upside risks to inflation, Directors emphasized that MAS should remain data dependent and stand ready to tighten further if second-round inflationary pressures emerge, with due regard to broader domestic conditions.
Directors agreed that the moderately expansionary fiscal stance of the FY2026 budget appropriately balances structural transformation needs with macroeconomic stability. However, they emphasized that if more adverse energy shocks materialize, the authorities should stand ready to provide targeted and time-bound support to affected households and businesses. Singapore has substantial fiscal space to respond to major downside shocks, but broad-based fiscal support should be avoided to not amplify inflationary pressures.
Directors noted the staff’s assessment that Singapore’s external position in 2025 is substantially stronger than the level implied by medium-term fundamentals and desirable policies. Many Directors, however, considered that Singapore’s unique characteristics can lead to uncertainty around the external balance assessment, which calls for a cautious interpretation and communication of this result. A few Directors considered that Singapore’s unique structural features merit large external buffers to safeguard against shocks. While recognizing the gradual appreciation in the real effective exchange rate in recent years, the point was made that a faster appreciation could help address external imbalances. Directors encouraged continued efforts to strengthen social protection and infrastructure spending to support external rebalancing in the medium and long run.
Directors concurred that Singapore’s financial sector remains resilient. They welcomed the authorities’ efforts to strengthen vigilance, stress testing, and contingency planning against emerging risks from geopolitical tensions, trade fragmentation, the rapidly evolving AI landscape, and tightening global financing conditions. They encouraged MAS to continue strengthening oversight of NBFIs and to enhance data coverage on bank-NBFI linkages. Continued efforts to strengthen cyber resilience and the AML/CFT framework remain important.
Directors welcomed Singapore’s continued progress toward stronger and more inclusive growth, including supporting AI adoption by firms and ongoing efforts toward reskilling and upskilling Singapore’s workforce.
READ MORE: https://www.imf.org/en/news/articles/2026/07/20/pr26253-singapore-imf-executive-board-concludes-2026-article-iv-consultation
