Strong sectoral performances and global resilience maintain optimistic growth outlook despite economic uncertainties.
SINGAPORE: The Ministry of Trade and Industry (MTI) has reaffirmed its 2024 GDP growth forecast for Singapore at a range of 1% to 3%. This forecast reflects the steady performance of the nation’s economy in the first quarter of 2024, along with ongoing global and domestic economic developments.
In Q1 2024, Singapore’s economy grew by 2.7% compared to the same period last year, continuing the 2.2% expansion seen in Q4 2023. Key drivers of growth included strong performances in the finance and insurance, transportation and storage, and wholesale trade sectors.
The global economic environment has shown resilience since the MTI’s previous Economic Survey in February, with strong economic growth in major economies like the US and China. This growth was driven by robust domestic demand in the US and external demand in China. The recovery in the global electronics sector, particularly in artificial intelligence (AI)-related chips, has benefited regional economies like South Korea and Taiwan.
Global Outlook: Despite strong performance in the first quarter, global GDP growth in major economies is expected to slow due to tighter financial conditions. However, recovery is anticipated later in 2024, as policy rate cuts are expected to stimulate growth. In the US, growth prospects have improved due to a strong job market and increased investments in AI. Despite inflation concerns, the Federal Reserve might delay rate cuts but could ease policies later in the year to support growth.
China’s GDP growth is projected to exceed earlier expectations, supported by government initiatives in strategic manufacturing and infrastructure investments, as well as efforts to stabilize the property market. Southeast Asia’s growth is likely to continue, driven by strong domestic demand, tourism recovery, and increased external demand, although risks such as geopolitical tensions and global supply chain disruptions remain.
Sectoral Performance and Projections: Singapore’s manufacturing and trade sectors are expected to improve gradually throughout 2024, particularly the electronics cluster, which is set to benefit from increasing demand for semiconductors used in smartphones, PCs, and AI technologies. This recovery is also expected to positively impact related sectors like precision engineering and machinery.
However, the manufacturing sector contracted by 1.8% year-on-year in the first quarter, reversing the 1.4% growth seen in Q4 2023, primarily due to declines in biomedical manufacturing, electronics, and general manufacturing clusters.
On a positive note, Singapore’s aviation and tourism sectors are expected to continue their strong rebound, driven by a resurgence in air travel and tourism demand. Sectors like accommodation, air transport, aerospace, retail trade, and food services are poised for growth. The accommodation sector expanded by 14.4% year-on-year in Q1 2024, fueled by a significant rise in international visitors and strong international event schedules.
The finance and insurance sector also remains robust, benefiting from higher tourist spending and the peak of global policy interest rates, which supports banking and fund management segments through higher commissions and fees. The sector saw a 6.5% year-on-year growth in Q1 2024.
