In the latest announcement, Singapore's Deputy Prime Minister and Finance Minister, Heng Swee Keat, stated that there would be no further increase in the Goods and Services Tax (GST) before 2030. He also mentioned that the Ministry of Finance will continue to adopt a rolling forecast mechanism to ensure accurate assessment and forecasting of the country's fiscal needs beyond 2030. Despite maintaining the current GST rate, the government will flexibly adjust related policies based on economic development and fiscal conditions to ensure the long-term sound management of public finances.
Over the decade before the outbreak of the COVID-19 pandemic, Singapore's inflation rate remained stable at around 4% annually, often even lower than the global inflation rate. However, during the pandemic, various countries' pandemic prevention measures led to supply-demand imbalances, triggering a surge in global prices of food, commodities, and energy, especially exacerbated by the Russia-Ukraine conflict in early 2021, which further intensified the rise in energy and food prices.
Nevertheless, the Monetary Authority of Singapore (MAS) began tightening monetary policy five times consecutively from October 2021, adopting a strategy to accelerate appreciation, thereby preventing Singapore's inflation rate from soaring as high as in other countries. It is estimated that without these actions, Singapore's core inflation rate for the whole of 2023 would reach 6.6%, instead of 4.2%.
A stable inflation rate helps businesses better plan costs and pricing strategies. Additionally, Singapore's relatively moderate currency value aids offshore companies in managing exchange rate risks and conducting cross-border transactions. However, close attention to changes in the international economic situation remains necessary.