Economists expect MTI to raise GDP estimates

SINGAPORE: Economists are forecasting an improvement in Singapore’s economic performance for the second half of 2024, with projections indicating a rise in year-on-year GDP growth to 3.1%, up from 3.0% in the first half.

This optimistic outlook comes despite challenging base effects, with several key factors driving the expected growth.

Nomura has revised its quarterly GDP growth forecast, anticipating an average increase of 1.3% quarter-on-quarter for the third and fourth quarters, significantly higher than the 0.3% recorded in the first half of the year.

This positive revision is attributed to a global technology sector rebound expected to enhance manufacturing output and export volumes.

“Considering the flash estimates for H1 growth and the improving GDP growth trajectory in H2, we expect the Ministry of Trade and Industry (MTI) to raise its full-year GDP growth forecast to 2%-3% from the previous 1%-3% range.

We also anticipate that 2024 GDP growth will likely be at the upper half of this narrower forecast range,” Nomura told Singapore Business Review (SBR).

RHB Bank also told SBR that it shares a positive outlook for Singapore’s economy in the second half of the year, citing three primary reasons for its resilience.

Firstly, Singapore’s significant exposure to the global economy through trade and investment positions it to benefit from robust global GDP growth, particularly from the US and China, which are projected to grow by 2.5% and 5.0%, respectively, in 2024.

Secondly, RHB forecasts that a potential reduction in the US Federal Funds Rate in the fourth quarter of 2024 could stimulate investment inflows into ASEAN and Singapore.

Lower borrowing costs and a heightened risk appetite are expected to drive this investment activity.

Lastly, RHB predicts that global inflation pressures will gradually ease during the same period. This would benefit Singapore’s import-reliant economy by lowering producer and import prices, thus supporting real rates.

Based on these factors, RHB told SBR that it projects a full-year GDP growth of 2.5% for Singapore, at the upper end of the current government estimate.

As the second half of 2024 unfolds, Singapore’s economic landscape appears poised for a period of sustained growth, bolstered by favourable global economic conditions and strategic policy adjustments. /TISG