The Ministry of Trade and Industry (MTI) projected Singapore’s GDP growth in 2024 to come in at 3.5%. This is better than the forecasted 1.0% to 3.0% that MTI put out at the start of the year.
Spearheaded by a 5.4% year-on-year expansion in the third quarter, Singapore’s overall GDP growth for the first three quarters of 2024 is up to 3.8%.
An upturn in the global electronics cycle supported the growth in Singapore’s manufacturing, wholesale trade and finance & insurance sectors.
However, consumer-facing sectors, such as retail trade and food & beverage services contracted, due to strong demand for overseas travel, and coupled with a slower recovery in international visitor arrivals and weak tourist spending.
Despite a brighter 2024, the growth projection for Singapore’s economy in 2025 is still expected to be within the 1.0% to 3.0% range.
Source: MTI
Singapore’s Economy Bolstered By Major Trading Partners
The US, EU and regional economies such as Malaysia delivered stronger-than-expected consumption growth in the third quarter of 2024. At the same time, China’s cooling economy came within expectations.
For the last quarter in 2024, US and EU GDP growth is expected to be subdued, while China is expected to improve on the back of recently announced government support measures.
Singapore’s economy should remain resilient, partially thanks to the ongoing recovery in global electronics demand. This should support the manufacturing sector, as well as outward-oriented services sector such as the wholesale trade sector.
However, inward-oriented tourism-related and consumer-facing sectors, such as retail trade, food & beverage services, will continue to remain sluggish with slower recovery in tourism.
Sectors That Will Be Most Affected In 2025
Singapore’s manufacturing and trade-related service sectors may continue to benefit from rising demand for semiconductor chips in end-markets such as PCs and smartphones amidst the PC refresh cycle and rollout of Artificial Intelligence (AI)-capable devices.
This may have positive spillover effects on Singapore’s precision engineering cluster and the machinery, equipment & supplies segment of the wholesale trade sector.
At the same time, the aerospace and marine & offshore engineering segments should drive growth in the transport engineering cluster.
On a similar note, outward-oriented services sectors such as the information & communications and finance & insurance sectors are projected to register healthy growth on the back of sustained enterprise demand for digital solutions and services and favourable financial conditions amidst global policy rate cuts, respectively.
The tourism-related sectors may benefit from a recovery in IVA.
On the other hand, growth in consumer-facing sectors such as the retail trade and food & beverage services sectors is likely to remain weighed down by increased local outbound travel.
Key Global Economic Uncertainties To Persist Into 2025
Further escalations in geopolitical conflicts in Ukraine and Middle East, and trade tensions between major economies could lead to higher oil prices and production costs and greater policy uncertainty. This could lead to a decline in global investment and trade.
A disruption to the global disinflation process could lead to tighter financial conditions for longer. This could potentially trigger latent vulnerabilities in financial systems.
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