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The revision comes after evaluating Singapore's economic performance in the first half of the year, alongside the latest global and domestic economic conditions.
Singapore’s Ministry of Trade and Industry (MTI) has announced that the country’s gross domestic product (GDP) growth forecast for this year has been narrowed from '1% to 3%” to “2 to 3%”.
In its report on Tuesday (13 August 2024), the ministry said in Q2 2024, the economy grew by 2.9% compared to the same period last year, continuing the 3% growth from the previous quarter.
On a quarter-to-quarter basis, adjusted for seasonal changes, the economy expanded by 0.4% — remaining unchanged from Q1 2024. Overall, for the first half of 2024, Singapore’s GDP growth averaged 3% year-on-year.
Economic outlook for 2024 across markets and regions
The US
Since May's Economic Survey of Singapore, the US economy has performed better than expected in Q2 2024, driven by strong domestic demand. For the remainder of 2024, GDP growth is anticipated to gradually ease as consumption growth slows and labour market conditions weaken, though investment growth, particularly in AI-related sectors, is likely to remain robust.
Japan
Japan's GDP growth has been weighed down by weak private consumption, with real wages continuing to decline. However, GDP growth is expected to improve over the course of the year as private consumption strengthens, supported by broader wage increases and easing inflationary pressures.
Malaysia
The Malaysian economy outperformed expectations in the second quarter, driven by strong domestic demand.
Eurozone
GDP growth in the Eurozone is projected to gradually improve. Although industrial activity and investments are expected to remain subdued, a firmer recovery in consumer spending—helped by easing price pressures and more accommodative monetary policy—will support growth.
China
China’s economy is projected to grow at a slightly slower pace in the second half of the year due to tapering investment growth and overcapacity in some sectors. However, the property market is likely to stabilise with government support measures, leading to improved consumer sentiment and a modest recovery in consumption.
Southeast Asia
GDP growth in key Southeast Asian economies is expected to pick up slightly in the second half of the year, supported by improved domestic demand and ongoing recoveries in global electronics and tourism demand.
Singapore
Overall, Singapore’s external demand outlook is expected to see a gradual recovery in the second half of the year. However, there are still some risks to the global economy.
Firstly, worsening geopolitical and trade conflicts could hurt business confidence and increase production costs, potentially impacting global trade and growth.
Secondly, any disruptions to the global process of reducing inflation might lead to tighter financial conditions for a longer period, causing market volatility or exposing weaknesses in banking and financial systems.
Economic performance by sector in Q2 2024
In the second quarter, GDP growth was primarily driven by the following sectors:
- Wholesale trade
- Finance & insurance
- Information & communications
Manufacturing
In Q2 2024, the manufacturing sector contracted by 1% year-on-year, an improvement from the 1.7% decline in Q1 2024. This drop was mainly due to declines in the biomedical and precision engineering clusters, with pharmaceuticals significantly impacting the biomedical sector.
However, the electronics cluster grew, driven by the strong demand for smartphones, PC, and AI-related chips.
On a quarter-to-quarter, seasonally adjusted basis, the sector decreased by 0.9%, better than that of the 5.3% contraction in the previous quarter.
Construction
The construction sector grew by 3.8% year-on-year, continuing the 4.1% growth from the first quarter, due to the higher output in both public and private construction projects.
On a quarter-to-quarter, seasonally adjusted basis, the sector expanded by 1.8%, reversing the 1.9% contraction seen in the previous quarter.
Wholesale trade
The wholesale trade sector grew by 3.9% year-on-year, up from 2.5% in the previous quarter. This growth was driven by increases in machinery, equipment, supplies, and other segments, with higher sales of electronics components, telecommunications and computers, and transport equipment contributing.
On a quarter-to-quarter, seasonally adjusted basis, the sector expanded by 1.7%, down from 2.2% in the previous quarter.
Retail
The retail trade sector contracted by 2.1% year-on-year, down from a 2.5% growth in Q1 2024. This decline was primarily due to a decline in non-motor vehicle sales volume which outweighed an increase in motor vehicle sales volume.
On a quarter-to-quarter, seasonally adjusted basis, the sector contracted by 3.0%, reversing the 2.6% growth seen in the previous quarter.
Information & communications
The information and communications sector grew by 6.4% year-on-year, slightly down from the 6.5% growth recorded in the first quarter. Within this sector, the IT and information services segment saw strong growth, driven by software development and online marketplaces for goods.
On a quarter-to-quarter, seasonally adjusted basis, the sector expanded by 0.4%, up from 0.1% in Q1 2024.
For the full breakdown of the economic performance of sectors in Q2, 2024, refer to the full report.
READ MORE: Singapore's GDP grew by 2.9% in Q2 '24, extending the 3% growth recorded in Q1
Infographics / MTI
Lead image / MTI Economic Survey press release
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