SINGAPORE — Singapore’s economy has surpassed expectations in the third quarter of 2024, prompting the Government to revise its growth forecast upwards to around 3.5 per cent for the year. This update comes alongside warnings of a potential slowdown in 2025, attributed to global uncertainties stemming from geopolitical conflicts and economic policy shifts.
Third-Quarter Performance Shines
According to the Ministry of Trade and Industry (MTI), the economy expanded by 5.4 per cent in the third quarter, outperforming preliminary estimates of 4.1 per cent. This represents the highest year-on-year growth since late 2021 and positions the overall growth for the first three quarters at 3.8 per cent.
Sector Contributions
- Manufacturing: Grew by 11% year-on-year, significantly contributing to the GDP.
- Wholesale Trade: Benefitted from global recovery in electronics.
- Finance and Insurance: Continued to show robust growth.
Dr Beh Swan Gin, MTI’s Permanent Secretary, noted that the global electronics cycle plays a crucial role in this uplift. The positive performance of the electronics sector, fuelled by strong demand for semiconductor chips, has had beneficial spillover effects across various industries.
Concerns for 2025
While the current forecast for 2024 looks promising, MTI has adjusted the 2025 growth outlook to between 1 and 3 per cent, reflecting potential challenges ahead. One major factor is the renewed tariffs proposed by potential US President Donald Trump, which could impact Singapore’s trading partners and, consequently, its own economy.
Tourism and Consumer-Sector Challenges
Despite optimism in several sectors, the tourism and consumer-facing industries appear to be lagging. Slower-than-expected international visitor arrivals and subdued tourist spending could have lingering effects on sectors such as accommodation, retail, and food & beverage services.
Looking Ahead
With the global economy still facing uncertainties, economists from DBS and OCBC have offered varying forecasts. DBS predicts a 3.8 per cent growth for 2024, while OCBC’s chief economist forecasts a slightly lower growth rate of 3.1 per cent in the final quarter.
In summary, while Singapore’s economy shows promising signs of recovery and resilience for 2024, stakeholders remain cautious about the external environment and the potential ramifications of policy changes in other nations.