Singapore raises 2024 growth forecast as recovery takes hold

Bloomberg
Updated ·3-min read
The government upgraded its estimated 2024 expansion to around 3.5% from a previous range of 2%-3% suggesting Singapore’s recovery is well entrenched. (Photo: Nicky Loh/Bloomberg)
The government upgraded its estimated 2024 expansion to around 3.5% from a previous range of 2%-3% suggesting Singapore’s recovery is well entrenched. (Photo: Nicky Loh/Bloomberg)

By Niluksi Koswanage

(Bloomberg) — Singapore raised its growth forecast for this year as the economy is recovering faster than anticipated, though it cautioned on risks for 2025 given an expected barrage of tariffs from a new Trump administration.

The government upgraded its estimated 2024 expansion to around 3.5 per cent from a previous range of 2 per cent-3 per cent suggesting Singapore’s recovery is well entrenched. It sees next year’s growth in a 1 per cent-3 per cent range, reflecting global volatility given likely trade tensions generated by Donald Trump’s presidency, China’s slowdown and other geopolitical fissures in the Middle East and Ukraine.

“On balance, Singapore’s overall external demand outlook is expected to remain resilient for the rest of 2024,” the Ministry of Trade and Industry said in a statement. “Nonetheless, global economic uncertainties have increased.”

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Gross domestic product advanced 3.2 per cent in the three months through September from the prior quarter, the ministry said in its final estimate on Friday (22 Nov). That compares with a preliminary reading of a 2.1 per cent increase and economists’ forecast of a 2.7 per cent gain.

The economy expanded 5.4 per cent in the third quarter from a year earlier, compared with a prior official estimate of a 4.1 per cent gain, according to the ministry. The median survey of economists pegged it at 4.7 per cent.

While Trump is likely to impose tariffs across the world, the “US enjoys a trade surplus with Singapore, so that is a positive for us,” said Beh Swan Gin, permanent secretary with the Ministry of Trade and Industry. The US accounts for 10 per cent of Singapore’s trade and 20 per cent of investment into the city-state.

The ministry said any further escalation in geopolitical conflicts, including the Middle East, and trade tensions could lead to higher oil prices and production costs. Singapore is particularly vulnerable to global inflation risks since it imports a lion’s share of basic goods.

“Disruptions to the global disinflation process could lead to tighter financial conditions for longer and the desynchronisation of monetary policies across economies, potentially triggering latent vulnerabilities in financial systems,” the ministry said in the statement.

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Singapore’s growth pace should be sustained for the rest of 2024 and into early 2025, buoyed by an upturn in the electronics outlook with “tailwinds from some front-loading of exports ahead of Trump’s proposed tariffs on US imports,” UOB economist Jester Koh wrote in a note. The bank cut its GDP forecast next year to 2.5 per cent from 2.9 per cent previously.

DBS kept its 2025 growth projection at 2.8 per cent but noted the potential downside risks, particularly from a wider trade war under Trump who pledged higher tariffs against China imports and blanket levies on all shipments into the US.

“The eventual global economic impact would depend on the sequence of the rollout of the new administration’s policies,” DBS economist Chua Han Teng said in a note.

The Monetary Authority of Singapore, which uses the exchange rate rather than interest rates to control price growth, said in its latest review that the disinflation trajectory in the city is “well entrenched” though it cautioned on upside risks to prices.

The MAS left monetary settings on hold for a sixth straight review last month, concerned about price flare-ups. Singapore is due to report October consumer price data next week with core inflation having remained elevated.

(Updates with economists’ comments from ninth paragraph.)

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