SINGAPORE: The Ministry of Trade and Industry (MTI) has revised its gross domestic product (GDP) growth forecast for 2024 to a range of 2.0-3.0 per cent, following an assessment of the country’s economic performance in the first half of the year and recent global and domestic economic conditions.
This update comes after the previous forecast, which anticipated growth between 1.0 and 3.0 per cent.
MTI has revealed that the country’s economy grew by 2.9 per cent year-on-year (y-o-y) in the second quarter of 2024, continuing the 3.0 per cent expansion recorded in the first quarter. The average GDP growth for the first half of 2024 stands at 3.0 per cent y-o-y.
MTI attributed the second-quarter growth primarily to strong performances in the wholesale trade, finance and insurance, and information and communication sectors.
The finance and insurance sector, in particular, saw a notable increase of 6.7 per cent y-o-y, driven by surging net commissions in banking and fund management, bolstered by easing global interest rates.
In contrast, the manufacturing sector experienced a contraction of 1.0 per cent y-o-y in the second quarter.
This decline was largely due to reductions in output within the biomedical manufacturing and precision engineering clusters, with a significant drop in pharmaceuticals production impacting the biomedical sector.
Additionally, consumer-facing sectors, including retail trade and food and beverage services, also faced a downturn, partly due to increased outbound travel by locals.
Looking forward, MTI observed that the economic growth performances of Singapore’s major trading partners have largely aligned with earlier expectations.
However, there were notable exceptions: the United States and Malaysia outperformed expectations in the second quarter, driven by strong domestic demand, whereas Japan’s GDP growth was hindered by weak private consumption and declining real wages.
The ministry forecasts a gradual easing in U.S. GDP growth for the remainder of 2024, with slower consumption growth and deteriorating labor market conditions.
China’s economy is also expected to grow at a slightly slower pace in the latter half of the year due to tapering investment growth and signs of overcapacity in certain sectors.
In Southeast Asia, GDP growth is anticipated to see a modest pickup in the second half of the year, supported by improved domestic demand and ongoing recoveries in global electronics and tourism sectors.
Singapore’s external demand outlook is expected to remain resilient through the year.
Despite these positive signs, MTI highlighted two key downside risks to the global economy, such as the potential intensification of geopolitical and trade conflicts, which could negatively impact business sentiment and increase production costs, thereby affecting global trade and growth.
Additionally, disruptions to the global disinflation process could lead to prolonged tighter financial conditions and increased market volatility, potentially exposing vulnerabilities in banking and financial systems. /TISG