Price Stability

The Global Economy:

  • Global economic growth is expected to weaken over 2023, as the effects of tighter monetary policy restrain real activity and cyclical tailwinds dissipate. 
  • While China experienced a strong post-reopening rebound in Q1 2023, its growth momentum is set to ease over the next few quarters as activity normalises. Moreover, as the recovery has, and will be primarily driven by consumer services, the spillovers to the rest of Asia are not expected to offset the negative impact of weaker demand from advanced economies. 
  • Overall global inflation is forecast to moderate this year, but core inflation is expected to decline only gradually, given firm services demand and the imbalances in labour markets that will take time to resolve. 
  • Risks and uncertainties to global growth have risen. Specifically, higher global interest rates have surfaced latent vulnerabilities within the financial system, which present risks to global financial stability and the growth outlook.

The Singapore Economy:

  • The Singapore economy has slowed discernibly since the last quarter of 2022, weighed down by weakness in the trade-related sectors amid the global manufacturing downturn. The deep retraction in the global electronics industry and banking stresses abroad have dampened Singapore’s growth prospects, especially for the external-facing sectors. At the same time, the pace of expansion in the domestic-oriented sectors should also moderate as higher consumer prices and interest rates constrain spending.
  • Singapore’s GDP growth is expected to ease from 3.6% in 2022 to 0.5%–2.5% in 2023, with the outturn currently forecast to come in at around the mid-point of the range. The near-term outlook remains uncertain with downside risks. Should latent vulnerabilities in the global financial system emerge in the coming months, consumer and investor confidence could take a further hit, with adverse implications for the broader economy.


  • MAS Core Inflation saw an uptick in January 2023 due to the expected boost to consumer prices from the increase in the GST rate. More generally, core inflation has also been high as businesses have raised prices at a firm pace to rebuild margins that were eroded following the earlier sharp increases in costs.
  • However, inflation has been on a broad moderating path, with core inflation falling to 4.7% in May from 5.4% in Q1 2023. In H2 this year, inflation should slow further as imported costs are reduced and the current tightness in the domestic labour market eases. Amid the easing in global supply chain frictions as well as the decline in global energy and food commodity prices, Singapore’s import price inflation has turned negative and should remain so over the rest of the year. Domestic wage growth is also anticipated to ease alongside the moderation in labour market tightness, particularly in the external-facing sectors.
  • MAS Core Inflation is forecast to come in significantly lower by end-2023, at 2.5–3.0% y-o-y. It should average between 3.5–4.5% for the year as a whole. Meanwhile, CPI-All Items inflation is forecast to come in at 4.5–5.5%. Excluding the effects of the GST increase, core and headline inflation are expected to average 2.5–3.5% and 3.5–4.5% respectively. 

Chart 1: Singapore and Global Inflation (% Year-on-year)

Monetary Policy:

  • MAS kept monetary policy settings unchanged in April 2023, having tightened monetary policy five consecutive times since October 2021. 
  • The effects of MAS’ monetary policy tightening moves between October 2021 and October 2022 are still filtering through to the economy and will dampen inflation further. 
  • Excluding the transitory impact of the GST increase, core inflation momentum has slowed from its peak in mid-2022. At the same time, against the intensifying risks to the global growth outlook, the level of activity in the Singapore economy could slip more discernibly below potential, resulting in a negative output gap.
  • Against this backdrop, MAS assesses currently that the prevailing monetary policy stance is sufficiently tight and appropriate for securing medium-term price stability. 

Chart 2: S$NEER and Changes to the Monetary Policy Stance