Revised projections reflect steady growth but acknowledge global uncertainties.
SINGAPORE: The Ministry of Trade and Industry (MTI) has narrowed Singapore’s GDP growth forecast for 2024 to a range of 2.0–3.0 per cent, revising the earlier projection of 1.0–3.0 per cent. The updated outlook follows an assessment of the nation’s economic performance in the first half of the year and ongoing global and domestic economic conditions.
Singapore’s economy expanded by 2.9 per cent year-on-year (y-o-y) in the second quarter of 2024, closely mirroring the 3.0 per cent growth recorded in the first quarter. For the first half of the year, average GDP growth stands at 3.0 per cent y-o-y.
Sectoral Performance
Growth in the second quarter was led by robust performances in wholesale trade, finance and insurance, and information and communication sectors.
The finance and insurance sector recorded a significant 6.7 per cent y-o-y growth, driven by rising net commissions in banking and fund management, supported by easing global interest rates.
Conversely, the manufacturing sector contracted by 1.0 per cent y-o-y, weighed down by declines in the biomedical manufacturing and precision engineering clusters. A notable drop in pharmaceuticals output contributed to this contraction.
Consumer-facing sectors such as retail trade and food and beverage services also faced challenges, partly attributed to increased outbound travel by Singapore residents.
Global Context and Key Trends
MTI noted that the economic performance of Singapore’s major trading partners generally aligned with expectations.
The United States and Malaysia exceeded forecasts in the second quarter, bolstered by strong domestic demand.
Japan’s growth was constrained by weak private consumption and declining real wages.
China is expected to see a slight slowdown in the second half due to tapering investment growth and sectoral overcapacity, though government support is anticipated to stabilize the property market and improve consumer sentiment.
Southeast Asia is likely to experience modest GDP growth, supported by stronger domestic demand and recoveries in the global electronics and tourism sectors.
Future Outlook and Risks
Singapore’s external demand outlook remains resilient for the remainder of 2024. However, MTI highlighted two significant downside risks to the global economy:
Geopolitical and trade conflicts: These could undermine business sentiment, elevate production costs, and dampen global trade and growth.
Disruptions to global disinflation: Such disruptions could lead to prolonged tighter financial conditions, increased market volatility, and potential vulnerabilities in banking and financial systems.
Despite these challenges, Singapore’s economy continues to display resilience, supported by diverse sectors and a favorable external environment.
