International Monetary Fund (IMF) report released on Saturday covering the Asia-Pacific news focuses on the new course for decrease in foreign labor quota. Singapore officials aspire to promote domestic productivity and secure better unemployment statistics among the country’s population. However, IMF expressed concerns about such strategy setting back the competitive strength of the country and the perspectives for its economic growth.
So far inflation has been kept under control by Singaporean authorities, but this trend is a “subject to a variety of risks”, as the wording goes in the report. One of such risks is the decision to slow the inflow of migrant workers that provide cheaper work force. In the report IMF predicts that it will take some ling while for the country’s economy to feel the positive outcome of such measures, while productivity and competitiveness will soon decline abruptly.
So far, the policy of hiring fewer overseas workers in the budget plan for 2013 lead to narrowing of the job market bid-asks. Increase in salaries contributed to core inflation growth.
The IMF recommendation to the Singaporean government is to put their best efforts in order to keep the level of surprisingly high trade surplus that was achieved by the end of 2013 that has seen a 1.2 percent rise from 17.5 percent of GDP in 2012 to 18.3 percent.
Since Singapore’s economy vastly depends on the trade flow which is a subject to negative changes connected with decline in number of new trading partners and shocks experienced by the global market.
The executive board of IMF directors issued recommendations for the country’s growing potential not to go in the reverse direction that consisted in constant assessment of financial risks, promote equality and address the issues bought on by demography problems.
IMF report sees Singapore economy grow presently stronger with the forecast growth of GDP by 3 percent in 2014 and 2015. The rise of core inflation anticipated by the Monetary Fund by 2015 is 2.4 percent.