Singapores economy is anticipated to remain resilient for the remainder of 2024, with growth now projected to reach the upper end of the official forecast range. On August 13, the Ministry of Trade and Industry (MTI) revised its growth forecast for 2024 to 2% to 3%, up from the previous range of 1% to 3%. This adjustment reflects the performance of Singapores economy in the first half of the year and current global and domestic economic conditions.
In the first half of 2024, Singapore’s gross domestic product (GDP) grew by an average of 3% year-on-year. This revised outlook aligns with the Monetary Authority of Singapore’s projection that GDP growth will be closer to its potential rate of 2% to 3% for the full year. MTI Chief Economist Yong Yik Wei indicated that, barring significant global risks, growth is expected to remain in this trend range through 2033, consistent with Prime Minister Lawrence Wong’s February statement aiming for annual growth of 2% to 3% over the next decade.
For the second quarter, the economy expanded by 2.9%, matching the advance estimate and following a 3% growth in the first quarter. This growth was driven primarily by the wholesale trade, finance and insurance, and information and communications sectors. However, the manufacturing sector contracted, mainly due to a sharp decline in pharmaceutical production, despite a recovery in the electronics industry supported by strong demand for chips used in smartphones, personal computers, and artificial intelligence.
MTI highlighted that while external demand for Singapore’s exports is expected to remain resilient, geopolitical and trade conflicts pose ongoing risks. These factors could impact business sentiment and increase production costs, potentially affecting global trade and growth. Nevertheless, a gradual recovery in the manufacturing sector, especially in electronics, is anticipated in the latter half of 2024. The recovery is expected to support related trade services and benefit from improved tourism and aviation demand.
Analysts, including OCBC Bank’s Selena Ling and DBS Bank’s Chua Han Teng, suggest that the growth momentum in the second half of 2024 will likely improve due to the broader tech upturn and stable domestic sectors, with a projected full-year growth of 2.6%. The rebound in labor productivity is expected to alleviate domestic cost pressures, contributing to overall economic stability.
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