SINGAPORE - Despite moves to curb immigration in recent years, Singapore will likely ease its rules on foreigner inflows in the long-term to remain economically competitive, the Economist Intelligence Unit (EIU) predicted on Tuesday.

This is because efforts to incentivise family formation and boost productivity among businesses have proved disappointing, the research unit said in a new report.

"In the long run, the changing population profile and the need to remain competitive will lead the Government to ease its immigration laws," said the 10-page special report on the state of affairs in Singapore in its 50th year.

"Given that the city state's unemployment rate averaged just 2 per cent in the first three quarters of 2014, restrictive labour practices will hurt business efficiency, as well as Singapore's competitiveness and reputation for openness."

The report also highlighted the challenges of political succession in Singapore, and said that the "mismatch" between the ruling party's parliamentary dominance and its declining support among the public was unsustainable.

But it struck a largely positive note on Singapore's prospects overall, predicting that "the tiny island city-state will retain its allure."

"It will continue to consolidate its position as a financial services hub, enhance its tourism infrastructure, strengthen its manufacturing base, aspire to become Asia's liquefied natural gas (LNG) hub and deepen its diplomatic engagement."

"As the economic aspirations of new emerging markets in the city state's neighbourhood gain traction, Singapore will have to invest more to retain its competitive edge. Yet years of prudent policy-making will ensure that Singapore retains its competitive edge and continues to draw business from across the world."