Ratings agency Moody's Investors Service gives a Triple A rating on Singapore's sovereign credit for her economic strength, institutions and the Government's financial position. Despite Singapore’s open economy and reliance on global trade and finance, she is resilient to global shocks.
In Moody’s annual credit report, Singapore excels in four areas for its strong economy, institutions, government finances and low vulnerability to external shocks. Moody's rated the Government's financial position as 'very high'.
Due to Singapore’s competitive trade sector and flexible labour market, our economy had rebounded strongly from the 2009 recession to achieve 14.8% growth in 2010. The liberal immigration policies had helped boost growth in the past 10 years.
The followings are some challenges noted in the report :
– As Singaporean felt anxious over the fast increase in foreign workers, our government has tighten the immigration policies which may lead to a tighter labour market and contribute to upward cost pressure which may be mitigated by higher productivity.
– One area of concern was the country's ability to use monetary policy to keep prices stable, with inflation having moved above 5 per cent recently.
– Moody's noted the exchange rate policy did not prevent interbank interest rates from dropping to historic lows. Demand for housing also remains high even though cooling measures have helped slow price increases.
However, Moody's has rated the Government's financial position as being 'very high', despite the move to channel more resources to help lower-income earners.
It said the country's strong balance sheet was backed up by investments made by the Government of Singapore Investment Corp which has ensured the resilience of its credit profile through the global recession.
It added that Singapore's financial system remains resilient to shocks, largely due to local banks' healthy balance sheets.
Moody's said political risks remain low as the quality of institutions and the civil servants who manage macroeconomic and fiscal policy are not likely to be affected by recent political developments.
25 Jun 2012