Singapore maintains GDP growth forecast for 2024 at 1-3%

Air travel & tourism recovery will continue to support sectors such as accommodation, air transport, and retail trade; while the finance & insurance sector will benefit from increased tourist spending and the stabilisation of global interest rates.

Singapore's Ministry of Trade and Industry (MTI) revealed today (23 May 2024) that the country's GDP growth forecast for this year has been maintained at 1-3%. 

Since February's Economic Survey of Singapore, the global economic environment has remained strong with the US and China seeing better-than-expected growth in the first quarter, driven by high domestic and external demand, the ministry noted.

South Korea and Taiwan also benefited from the global recovery in electronics, particularly AI-related chips. 

However, GDP growth in major economies is expected to slow down due to tight financial conditions before picking up again later this year with expected policy rate cuts.

GDP growth in other markets/regions

US

In the US, a strong labour market and investment in AI have improved growth prospects slightly.

Despite this, the good performance in the first quarter and persistent inflation might delay interest rate cuts by the Federal Reserve, which could slow the economy in the near term.

In the Eurozone, weak investments and industrial activity are anticipated due to restrictive financial conditions and low external demand, but consumer spending may recover in the second half of 2024 as confidence improves and the European Central Bank cuts rates.

Asia

In Asia, China’s GDP growth is likely to be stronger than expected because of increased government support, particularly for manufacturing and infrastructure.

New property market support measures should also help consumption recover later in the year.

Southeast Asian economies are expected to grow as a result of strong domestic demand, tourism recovery, and increased external demand.

Challenges and concerns

However, MTI cautioned that the risk to the global economy still persists. Geopolitical tensions, such as those in the Middle East or Ukraine could disrupt supply chains and affect trade and growth. 

Moreover, delays in reducing global inflation could lead to longer-lasting tight financial conditions and expose vulnerabilities in banking systems. 

Emerging markets might also face volatility due to differences in monetary policy cycles with advanced economies.

What does this mean for Singapore?

With this in mind, Singapore's manufacturing and trade-related sectors are expected to gradually grow. The electronics sector should recover, boosting other sectors like precision engineering and machinery. The chemicals sector is also expected to grow due to capacity expansions, including in sustainable aviation fuel.

The recovery in air travel & tourism will continue to support sectors such as accommodation, air transport, and retail trade. The finance and insurance sector will benefit from increased tourist spending and the stabilisation of global interest rates, which will help banking and fund management.

Taking into account the performance of the Singapore economy in the first quarter, as well as the latest global and domestic economic developments, the GDP growth forecast for Singapore for 2024 is maintained at 1- 3%. Details of the country's performance in Q1 2024 are as follow:

Economic performance in Q1 2024 according to sector

• The manufacturing sector contracted by 1.8% year-on-year (y-o-y) in the first quarter, a reversal from the 1.4% growth in the previous quarter.
• Growth in the construction sector came in at 4.1% y-o-y, extending the 5.2% expansion in the fourth quarter of last year.
• The wholesale trade sector grew by 1.5% y-o-y, faster than the 0.2 % growth in the preceding quarter.
• The retail trade sector expanded by 2.7% y-o-y, a reversal from the 0.3% contraction in the previous quarter.
• Growth in the transportation & storage sector picked up to 6.8% y-o-y, from 2.8% in the fourth quarter.
• The accommodation sector expanded by 14.4% y-o-y, accelerating from the 1.5% expansion in the preceding quarter.
• The food & beverage services sector grew by 1.1% y-o-y, a reversal from the 1.5% contraction in the previous quarter.
• Growth in the communications sector rose to 6.3% y-o-y, from 4.7% in the fourth quarter. 
• The finance & insurance sector expanded by 6.5% y-o-y, an improvement from the 5.4% growth in the preceding quarter.
• The real estate sector grew by 0.6% y-o-y, better than the 0.1% expansion in the fourth quarter.
• The professional services sector expanded by 2.5% y-o-y, a turnaround from the 0.7% contraction in the previous quarter.
• The administrative & support services sector grew by 0.2% y-o-y, improving from the 1.7% contraction in the previous quarter.
• The “other services industries” grew by 3.7% y-o-y, extending the 3.9% growth in the preceding quarter.

The economy recorded a 2.7% y-o-y growth in Q1 2024, surpassing growth rate in the previous quarter. On a quarter-on-quarter seasonally adjusted basis, the economy expanded by 0.1%, extending the growth of 1.2% that was observed in Q4 2023.

READ MORE: Singapore's economy records 2.7% y-o-y growth in Q1 2024, surpassing growth rate in the previous quarter

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