Optimistic 2024 Outlook for Singapore after Stronger-Than-Expected 4Q2023 GDP
Singapore’s 4Q2023 GDP growth of 2.8% year-on-year has surpassed Bloomberg’s consensus estimate of 1.8% year-on-year growth. The Ministry of Trade and Industry (MTI) has released advanced estimates indicating that Singapore’s full-year GDP growth for 2023 came in at 1.2% year-on-year. Analysts believe that this strong 4Q recovery bodes well for the country’s economic outlook in 2024.
Analysts’ perspectives on Singapore’s 2024 prospects
DBS Group Research’s Chua expects recovery, albeit externally-driven and potentially fragile due to global uncertainties. Maybank Securities’ Chua and Lee anticipate balanced 2.2% growth fuelled by manufacturing recovery and reduced service sector spending. RHB Bank’s Gan maintains a 3.0% GDP estimate, citing favourable momentum and positive exports, especially with China’s recovery. Sumitomo Mitsui Banking Corporation’s Ryota predicts a 2.2% GDP growth with steady progress and minimal GST impact.
Differing opinions among analysts
While analysts from DBS, Maybank, RHB Bank, and Sumitomo Mitsui Banking Corporation hold an optimistic view of Singapore’s economic recovery in 2024, others like OCBC’s Selena Ling and UOB’s Alvin Liew and Jester Koh exercise caution. Ling anticipates a 2% GDP growth for 2024, citing a potentially less favourable external environment. UOB’s economists expect a choppy recovery in externally-oriented sectors in H1 2024, with significant improvement in H2. They also note the potential decline in consumer-related sectors post-pandemic and Singapore’s challenges in tourism competitiveness due to higher prices and a strong exchange rate compared to other ASEAN economies.
Expectations regarding the Monetary Authority of Singapore (MAS)
Maybank’s economists anticipate that MAS will maintain its current monetary policy stance in its upcoming meeting due to the recovery in the economy and still-elevated core inflation. Other analysts also expect MAS to hold its stance unchanged in January, reflecting confidence in Singapore’s economic trajectory.
In conclusion, Singapore’s 4Q2023 GDP growth has exceeded expectations, setting a positive tone for 2024. While analysts hold varying opinions on the extent of the recovery and potential challenges, there is overall optimism about Singapore’s economic prospects, with several factors such as manufacturing, exports, and external demand expected to play key roles in shaping the country’s economic performance in the coming year. The consensus suggests that Singapore is well-positioned to rebound from the challenges of 2023, albeit with some caution regarding the external environment.
