15-10-2024 (SINGAPORE) Singapore’s economy has experienced a remarkable upswing in the third quarter of 2024, with growth surpassing expectations and reaching 4.1 per cent year-on-year, according to advance estimates released by the Ministry of Trade and Industry on 14 October. This significant acceleration, outpacing the previous quarter’s 2.9 per cent growth, has been primarily attributed to a robust rebound in the electronics sector.
The city-state’s economic performance has comfortably exceeded the 3.8 per cent growth projection made by economists in a Reuters poll. On a quarter-on-quarter seasonally adjusted basis, the economy expanded by an impressive 2.1 per cent, marking a substantial improvement from the modest 0.4 per cent growth observed in the second quarter.
At the heart of this economic resurgence lies the manufacturing sector, which reversed its recent trend of contraction to post a strong 7.5 per cent year-on-year expansion in the third quarter. This turnaround is particularly noteworthy given the sector’s 1.1 per cent contraction in the previous quarter. The growth was broad-based, with all manufacturing clusters, barring biomedical manufacturing, reporting output expansions.
OCBC Bank’s chief economist, Selena Ling, highlighted the pivotal role of electronics in driving this manufacturing rebound. “The sharp upturn in manufacturing, following two consecutive quarters of contraction, was spearheaded by the electronics sector,” Ling noted. She further expressed optimism about the sustainability of this growth trajectory, citing the ongoing upswing in electronics and trade cycles.
The positive economic outlook is further bolstered by the easing of global financial conditions, with central banks initiating interest rate cuts. This favourable environment has led officials to project that the full-year economic growth is likely to approach the upper end of the previously forecasted 2 per cent to 3 per cent range.
In light of these developments, UOB associate economist Jester Koh has revised the bank’s 2024 full-year growth forecast upwards to 3.3 per cent from the previous 2.9 per cent. However, Koh also adjusted the 2025 forecast slightly downwards to 2.9 per cent from 3.2 per cent.
While manufacturing led the charge, other sectors of the economy also contributed to the overall growth. The construction sector, although showing a slight deceleration, still grew by 3.1 per cent year-on-year, supported by an increase in public-sector projects. The services sector, particularly in information and communications, finance and insurance, and professional services, collectively expanded by 4.3 per cent.
The finance and insurance sector demonstrated robust performance across all segments, with notable expansions in banking, financial services-related activities, and fund management. The wholesale and retail trade, along with transportation and storage sectors, maintained their growth momentum, collectively expanding by 3.5 per cent in the third quarter.
