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Singapore’s New PM needs to tackle cost of living, analysts say

Lawrence Wong
Lawrence Wong (Photographer: Lionel Ng/Bloomberg)

By Cynthia Li

(Bloomberg) — Singapore’s Lawrence Wong will need to make fighting inflation his top priority after taking office as prime minister next month, according to most economists in a Bloomberg survey.

Cost of living remains the most important concern for Singaporeans, with core inflation still elevated, nine of the 12 respondents said in the survey about the leadership transition scheduled for May 15.

Lawrence Wong
Lawrence Wong (Photographer: Lionel Ng/Bloomberg)

While Singapore’s central bank has kept its monetary policy settings tight, allowing the local dollar to appreciate and blunt imported inflation, the government too has put measures in place to buffer costs for households.

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Core inflation quickened to 3.6% in February, landing slightly above the 2.5%-3.5% range forecast for 2024 by the Monetary Authority of Singapore. The MAS sees price gains staying elevated in the earlier part of the year, before moderating through the fourth quarter and falling in 2025 — by when elections are due to be held.

The ruling People’s Action Party’s 2020 election performance was its worst in terms of parliamentary seats since the country’s founding, despite still remaining dominant.

Forging friendly ties with the US and China, the world’s two biggest economies, and boosting trade were viewed as the next important priorities in that order, according to the survey results.

Although a stronger Singapore dollar makes imports cheaper, it dents the export competitiveness of the city-state, given the value of outbound shipments exceeds the size of the island’s economy. Singapore’s non-oil domestic exports have fallen two of the three months for which data is available this year.

The need to balance employment opportunities for local workers with foreigners figured as the fourth most important task for Wong and his team. All respondents expect stability and policy continuity, given the leadership change was well telegraphed.

—With assistance from Karthikeyan Sundaram.

©2024 Bloomberg L.P.