15-2-2024 (SINGAPORE) Singapore remains steadfast in its economic outlook for 2024, projecting a growth range of 1 to 3 per cent, following data released on Thursday (Feb 15) indicating a marginally slower expansion than anticipated last year.
The Ministry of Trade and Industry (MTI) disclosed that the economy expanded by 1.1 per cent in 2023, slightly below initial government estimates of 1.2 per cent, as outlined in a quarterly report.
Beh Swan Gin, MTI’s Permanent Secretary for development, highlighted that growth was primarily fuelled by the services industry, particularly in sectors such as information and communications, as well as transportation and storage.
In the final quarter of 2023, gross domestic product (GDP) grew by 2.2 per cent year-on-year, falling short of projections at 2.8 per cent but accelerating from the 1 per cent growth recorded in the third quarter.
Quarter-on-quarter, on a seasonally-adjusted basis, the economy expanded by 1.2 per cent, missing an earlier forecast of 1.7 per cent but demonstrating increased momentum from the previous quarter’s 1 per cent growth.
MTI justified its decision to maintain the growth forecast for 2024, citing Singapore’s relatively unchanged external demand outlook since its last evaluation in November.
While advanced economies such as the United States and the Eurozone are expected to experience a slowdown in the first half of the year due to persistent tight financial conditions, regional economies are anticipated to witness growth, partly driven by the resurgence in global electronics demand.
However, MTI warned of significant downside risks in the global economy, including potential disruptions from conflicts such as the Israel-Hamas or Russia-Ukraine disputes, which could disrupt global supply chains and commodity markets.
Additionally, there are concerns regarding the impact of monetary policy tightening and idiosyncratic cost shocks such as adverse weather events, which could pose challenges to global trade and growth.
Despite these uncertainties, MTI anticipates a gradual pickup in growth for Singapore’s manufacturing and trade-related sectors, particularly within the electronics and precision engineering clusters.
Moreover, the tourism and aviation sectors are poised to benefit from a continued recovery in air travel and tourism demand, supporting segments such as aerospace, accommodation, retail, and food and beverage services.
Nevertheless, MTI expects the pace of growth across these sectors to moderate from the robust recovery witnessed in 2023 following the COVID-19 pandemic.
The Monetary Authority of Singapore (MAS) affirmed that its monetary policy stance remains appropriate, with the outlook for core inflation unchanged at this juncture.
MAS predicts core inflation to decelerate to an average of 2.5 to 3.5 per cent for 2024, down from 4.2 per cent in 2023.
Edward Robinson, MAS deputy managing director, acknowledged the ongoing uncertainties surrounding both growth and inflation fronts, affirming the central bank’s commitment to monitoring trends closely and conducting a comprehensive review in the next scheduled meeting in April.
