SINGAPORE (Aug 11): The International Monetary Fund (IMF) recently issued its Article IV report on Singapore, which is like a report card on the country’s economic performance.

The overall assessment was a positive one: The economy is recovering, inflation is low, the external sector is robust and the banking sector is in the pink of health.

However, IMF pointed to some areas of potential concern. These have caught our interest because they carry important policy implications.

First is IMF’s view that Singapore has an excessively high current account (CA) surplus, and the other is the innovation deficit.

The CA surplus could reflect some deep underlying imbalance in the economy. After all, the CA balance is the difference between savings and investment, so, too large a surplus indicates that either savings are far too high or investment is too weak.

Meanwhile, IMF has pointed out that while public spending on R&D has grown by leaps and bounds, the actual outcomes in innovation were relatively disappointing, resulting in an innovation efficiency performance that was in the bottom half of the class.

How serious are these areas of weaknesses and what can be done about them? Find out more in this week’s issue of The Edge Singapore (Issue 792, week of Aug 14), on sale now at newsstands, bookstores, gas stations and 7-11 outlets.