Singapore Expects Easing Rents and Inflation Despite Uncertain Growth Outlook

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On Wednesday, the Monetary Authority of Singapore (MAS) reported that the country's growth outlook for 2023 appears uncertain amid global headwinds, but rents may moderate in the coming quarters, easing price pressures in the city-state. The MAS expects the economy to grow between 0.5% and 2.5%, less than last year's 3.6%, hit by contractions in trade-related sectors amid a global downturn in manufacturing.

Despite this, the pace of residential rent increases, a key driver of inflation, is expected to moderate in the second half of the year as housing supply picks up after the pandemic, which could help ease living costs. Singapore's public and private residential rents have risen sharply since 2021 by 38% and 43%, respectively, mainly due to coronavirus-related disruptions in construction.

The MAS kept its monetary policy unchanged after five successive rounds of tightening since October 2021, including two surprise moves in 2022. It believes that the current monetary policy stance is sufficient to secure medium-term price stability. The moderation in rents will take time to pass through to inflation data, but the MAS expects headline inflation, which includes accommodation costs, to come in between 5.5% and 6.5% for 2023.

Overall, the report highlights the challenges Singapore faces amid a global economic slowdown, but it also offers some hope of easing price pressures for the city-state's residents.

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