Revised from the earlier projection of 1%–3%, reflecting improved performance in the first half of the year.
SINGAPORE: Singapore’s Ministry of Trade and Industry (MTI) announced on Tuesday (Aug 13) a narrowed gross domestic product (GDP) growth forecast for 2024, revising it to 2%–3%. This adjustment follows better-than-expected economic performance in the first half of the year.
Previously, GDP growth was forecasted at 1%–3%. For the first six months of 2024, Singapore’s GDP grew by an average of 3% compared to the previous year, driven by robust contributions from wholesale trade, finance, and information and communication sectors.
In Q2, the economy expanded by 2.9%, consistent with MTI’s earlier estimates but slightly below Q1’s 3% growth. On a quarter-on-quarter seasonally adjusted basis, GDP grew by 0.4%, matching Q1’s pace.
Sectoral Performance
While sectors like wholesale trade and finance drove growth, manufacturing faced challenges, particularly in the biomedical cluster, which saw a significant drop in pharmaceuticals output. Conversely, the electronics sector performed well, supported by strong global demand for AI-related chips and devices.
Consumer-facing sectors such as retail and food and beverage services contracted, partly due to increased outbound travel by locals.
Medium-Term Outlook
MTI’s chief economist, Yong Yik Wei, highlighted that Singapore’s medium-term growth trend is projected at 2%–3%, barring global economic risks. Gabriel Lim, MTI’s permanent secretary for policy, emphasized efforts to improve labour productivity as a lever for enhancing growth.
Economists are optimistic about the second half of the year. DBS economist Chua Han Teng predicts 2.7% growth for 2024, citing positive sequential growth momentum. Similarly, HSBC economist Yun Liu upgraded the GDP forecast to 3%, citing strong travel-related services and potential recovery in manufacturing and trade.
Global Context
Economic performances among Singapore’s major trading partners have mostly aligned with expectations. The US and Malaysia showed robust domestic demand, while Japan’s growth was tempered by weak private consumption.
The US economy is projected to slow, with consumption growth likely to weaken due to labor market pressures. Meanwhile, the Eurozone could see gradual GDP improvement as inflation eases. Japan is expected to benefit from wage growth and lower inflation, while China’s economy may stabilize despite slowing investment growth.
Key Risks and Opportunities
MTI identified two primary risks to global economic stability:
Geopolitical and trade conflicts, which could hurt business sentiment and trade volumes.
Prolonged tight financial conditions stemming from disrupted disinflation processes, which may increase market volatility and strain financial systems.
Despite these risks, Singapore’s external demand outlook remains resilient. Manufacturing recovery is anticipated, particularly in electronics and chemicals. Travel and tourism sectors are also expected to support growth, with inbound travel offsetting the impact of strong outbound travel by locals.
MTI noted that robust growth in finance and insurance is expected as global monetary policies shift toward easing.
This revised forecast reflects both the strengths and challenges of Singapore’s diversified economy and highlights the importance of adaptability amid evolving global conditions.
