Singapore

S'pore keeps triple-A credit rating

Rating agency Moody's credits S'pore's strong institutions, reserves and Government policies

Credit ratings agency Moody's has stuck with Singapore's triple-A rating - the agency's highest rating - and maintained a stable outlook for the country due to its fiscal discipline and financial stability.

Though Singapore's economy faces short-term challenges, its strong institutions, ample reserves and effective government policies will help it stay resilient in the longer term, Moody's noted. But it warned that Singapore must manage its transition to structurally lower growth smoothly. Otherwise, the rating could come under pressure.

Credit ratings are used to gauge creditworthiness and can impact a country's borrowing costs.

Singapore is one of the few economies to enjoy a triple-A rating.

But the Republic has been hit by the prolonged slowdown in world trade and weak global economic growth, said Moody's yesterday.

Singapore is also grappling with structural challenges such as an ageing population. This is compounded by the continued restrictions on foreign worker inflows.

These factors have weighed on growth, but the slower pace of economic expansion likely also reflects a mature economy that already has the highest gross domestic product per capita in the Asia-Pacific region, said Moody's.

Despite these challenges, Singapore's fiscal buffers have not been affected by the downturn in growth and continue to be more robust than those of other triple A-rated peers.

"These buffers include ongoing budget surpluses that contribute to growing fiscal reserves, which in turn further enhance the Government's financial position," Moody's said.

While household debt rose more than 9 percentage points to around 75 per cent of the economy last year, household assets are six times the size of liabilities. This provides a substantial buffer against rising interest rates and the ongoing softening in residential real estate prices, Moody's added.

Still, it warned that the triple-A rating could come under pressure if Singapore is unable to manage its transition to structurally lower economic growth.

This could lead to a deterioration in the country's economic strength relative to similarly rated peers.

EconomyAsiaSingapore