13-8-2024 (SINGAPORE) The Ministry of Trade and Industry (MTI) of Singapore has announced a narrowing of its gross domestic product (GDP) growth forecast for 2024, revising the projection to 2 per cent to 3 per cent. This adjustment, revealed on Tuesday, comes on the heels of a stronger-than-anticipated economic performance in the first half of the year.
Previously, the forecast range stood at 1 per cent to 3 per cent. The revision reflects the robust average GDP growth of 3 per cent observed during the initial six months of 2024 compared to the same period last year.
In its latest economic update, the MTI reported that Singapore’s economy expanded by 2.9 per cent in the second quarter, aligning with advance estimates released last month. This figure represents a slight deceleration from the 3 per cent growth recorded in the first quarter but surpasses economists’ expectations of 2.7 per cent growth as forecasted in a Reuters poll.
The second quarter’s growth was primarily propelled by strong performances in the wholesale trade, finance and insurance, and information and communication sectors. However, the manufacturing sector experienced a contraction, largely attributed to a decline in the biomedical manufacturing cluster, specifically in pharmaceuticals output. This downturn offset gains in the electronics cluster, which benefited from robust demand for smartphone, PC, and artificial intelligence-related chips.
Interestingly, consumer-facing sectors such as retail trade and food and beverage services saw a decline, partly due to increased outbound travel by local residents. On a quarter-on-quarter seasonally adjusted basis, the economy grew by 0.4 per cent, matching the expansion rate of the first quarter.
Looking ahead to the remainder of 2024, the MTI expressed cautious optimism about Singapore’s external demand outlook, describing it as “resilient”. This perspective is based on the economic performance of Singapore’s major trading partners, which has largely met expectations since the Economic Survey of Singapore in May.
Notably, the United States and Malaysia outperformed expectations in the second quarter, bolstered by strong domestic demand. Conversely, Japan’s growth was hampered by weak private consumption amid declining real wages.
The ministry anticipates a gradual improvement in Eurozone GDP growth and continued expansion of China’s economy, albeit at a slower pace in the latter half of the year. However, the MTI also highlighted two potential downside risks that could impact the global economy: the intensification of geopolitical and trade conflicts, and disruptions to the global disinflation process.
