Singapore’s growth is likely to converge with, and stay in line with its Aaa peers, over the medium to long term, although trends will remain highly volatile, says Moody’s Investors Service.

In its “Government of Singapore: Productivity Gains Crucial to Restore Robust Growth” report on Tuesday, Moody’s says that economic growth in Singapore has reached a tipping point, and significant productivity gains are key to restoring robust GDP growth.

Between 2000 and 2010, Singapore’s GDP grew by an average pace of 6.2%, higher than the median of 2.1% for Aaa-rated economies, but also one of the most volatile. But since then, growth has cooled, with the economy expanding 2.0% in 2015.

“Following years of rapid gains in income levels and output, Singapore faces the challenge of sustaining growth and raising median incomes in a spatially constrained economy with no natural resource base and a limited workforce,” says …