2024 GDP Growth Forecast narrows to 2-3% —MTI

SINGAPORE: On Tuesday (Aug 13), the Ministry of Trade and Industry (MTI) announced that Singapore’s annual GDP growth forecast has been narrowed to 2 to 3 per cent. Previously, a growth of 1 per cent to 3 per cent had been forecast.

This comes in the wake of an economic performance that was better than expected in the first six months of 2024.

On a year-on-year basis, the economy expanded by 3.0 per cent in the first quarter of the year and by 2.9 per cent in the second quarter. Meanwhile, on a quarter-on-quarter seasonally-adjusted basis, the economy grew by 0.4 per cent in both quarters.

Growth in the second quarter of 2024 was driven, in large part, by wholesale trade, finance and insurance, and information and communications sectors.

However, because of a steep decline in pharmaceutical output, the biomedical manufacturing cluster contracted, contributing to the overall shrinking of the manufacturing sector.

Meanwhile, the electronics cluster returned to growth because of a strong demand for smartphone, PC, and AI-related chips despite a weak demand for automotive and industrial chips.

As for consumer-facing sectors, including the retail trade and food and beverage services sectors, there has been a contraction, somewhat due to more locals travelling overseas.

While it warned that downside risks in the global economy continue, MTI added that Singapore’s external demand outlook is expected to be resilient for the rest of the year.

The ministry noted that if geopolitical and trade conflicts intensify. This could dampen business sentiments and increase production costs, which could weigh on global trade and growth.

Also, if there are disruptions to the disinflation process around the globe, this could lead to tighter financial conditions for longer and trigger market volatility or latent vulnerabilities in banking and financial systems.

However, amidst these conditions, the manufacturing sector in Singapore is expected to see a gradual recovery in the second half of 2024.

Because of the strong demand for smartphones, PC, and AI-related chips, the electronics cluster is specifically projected to recover more strongly, which would help boost the precision engineering cluster.

The chemicals cluster is also expected to continue to grow, supported by higher production in the petrochemicals and speciality chemicals segments.

However, the biomedical manufacturing cluster will likely shrink, with pharmaceutical output projected to stay weak for the rest of the year.

The manufacturing sector, particularly that of the electronics cluster, is expected to recover, benefiting trade-related services sectors such as the machinery, equipment, and supplies segment of the wholesale trade sector.

The tourism- and aviation-related sectors (e.g., accommodation and air transport) and the finance and insurance sectors are also expected to continue to grow. /TISG

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