Singapore's inflation is cooling, with the Monetary Authority of Singapore (MAS) projecting moderate economic growth in the coming years, as outlined in its semi-annual report on the city-state's economy. The core and headline consumer price index (CPI) inflation rates for 2025 are both expected to average between 1.5% and 2.5%, indicating a decrease from the anticipated range of 2.5% to 3% for core inflation in 2024, accompanied by a similar figure for the headline inflation index.
The MAS noted, "Inflation is expected to be lower next year as cost pressures stay contained." In contrast to many other central banks, the MAS does not maintain an explicit inflation target. However, it has made it clear in its official documents that an inflation rate below 2% is aligned with the goal of price stability.
Rather than targeting interest rates, the MAS focuses on managing the exchange rate of the Singapore dollar against a basket of other national currencies. From an economic perspective, Singapore's gross domestic product (GDP) is anticipated to grow within the upper end of a 2%-3% forecast range for 2024.
The MAS remarked, "The economy is expected to expand at a broadly similar pace next year." Located at the southern tip of the Malaysian peninsula, Singapore is poised to benefit in 2025 as global supply chains continue to shift away from mainland China. The MAS shared that, "ASEAN countries have mostly benefited from the diversion of electronics trade between the US and China, through increased foreign direct investment inflows that have bolstered their production and export capabilities." Singapore is strategically positioned to utilize its comparative strengths in producing upstream and midstream electronics components.
Additionally, it provides vital support and intermediation services, positioning itself advantageously within new and expanding trade dynamics..