Singapore Maintains Growth Forecast Amid Resilient External Demand
Singapore has kept its official full-year growth projection for 2024 steady at 1 to 3 per cent, as the Ministry of Trade and Industry (MTI) announced on Thursday (May 23). The decision comes as the outlook for external demand remains robust and is anticipated to improve throughout the year. Gross domestic product (GDP) for the first quarter remained at 2.7 per cent, matching April’s preliminary estimate. This marked an improvement from the previous quarter’s 2.2 per cent growth and slightly exceeded the 2.5 per cent year-on-year (yoy) growth anticipated by private-sector economists, as per a Bloomberg poll. On a seasonally adjusted quarterly basis, the economy expanded marginally by 0.1 per cent, unchanged from the initial estimate but slower than the previous quarter’s 1.2 per cent growth.
Key Sectoral Performance Highlights
The services industry drove Q1 growth, expanding by 3.9 per cent yoy, outperforming the initial estimate of 3.2 per cent. Manufacturing, however, contracted by 1.8 per cent, reversing the previous quarter’s growth of 1.4 per cent. Notably, the electronics cluster saw a decline in output due to reduced demand for automotive and industrial chips. Construction expanded by 4.1 per cent yoy, though slightly lower than the 4.3 per cent estimated in April.
Growth Outlook and Potential Risks
Despite the upbeat Q1 performance, there is a risk of Q2 growth decelerating to around 1.5 per cent yoy. The global economic environment remains robust, with better-than-expected growth in the US and China in Q1. Looking ahead, GDP growth in major economies is expected to ease in the near term due to tight financial conditions, before recovering alongside anticipated policy rate cuts later in the year. However, downside risks persist, including geopolitical tensions in the Middle East and vulnerabilities in emerging markets.
Sectoral Expectations
Singapore’s manufacturing and trade-related sectors are projected to witness a gradual improvement in growth over the remainder of the year. Specifically, the electronics cluster is anticipated to recover, benefiting precision engineering and wholesale trade segments. Additionally, the aviation and tourism-related sectors, as well as consumer-facing industries like retail trade and food-and-beverage services, are expected to see positive growth. The finance and insurance sector are poised for support from higher tourist spending and a projected peak in global interest rates.
