Singapore’s economy soars with 5.4% GDP growth, powered by manufacturing surge and booming electronics

SINGAPORE: The city-state’s economy saw a strong rebound in the third quarter of 2024, with the country’s Gross Domestic Product (GDP) expanding by 5.4% compared to the same period last year.

According to a report by the Institute of Chartered Accountants in England and Wales (ICAEW) published in the Singapore Business Review, this growth was largely fueled by the manufacturing sector, which reported an impressive 11% year-on-year (YoY) increase.

The strong performance marks a recovery from a mild contraction of 1.1% in the previous quarter.

Manufacturing leads the way

The standout performer was the domestic electronics industry, which surged by 17% YoY, helping to bolster overall manufacturing output. This growth highlights Singapore’s role as a key player in the global tech supply chain, further solidifying its economic recovery.

Service and construction sectors slow down

However, not all sectors experienced growth. The service and construction industries saw a slowdown, with quarterly growth falling to just 0.9% from the previous period.

The dip signals challenges in these sectors, which could impact broader economic momentum.

Looking ahead, Singapore’s exports are expected to continue benefiting from a global technology cycle but at a slower pace. Oxford Economics forecasts a slight global growth uptick in 2025, from 2.7% to 2.8%.

However, this is unlikely to drive a significant boost in business investments, and export growth may remain tempered.

Declining inflation, slower private consumption

Private consumption is also projected to slow down, with growth expected to drop from 6.1% in 2024 to just 2.5% in 2025, partly due to fewer interest rate cuts following the potential re-election of Donald Trump.

On a positive note, inflation is anticipated to ease to 2.0% in 2025, down from 2.4% this year, thanks to reduced car ownership costs and adjustments in global oil prices.

Monetary policy adjustments expected

With inflation cooling and export growth facing headwinds, the Monetary Authority of Singapore (MAS) may adjust its monetary policy.

Analysts expect a potential easing of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) slope while maintaining the policy band’s current centre and width.

While Singapore’s economy has shown strong growth in Q3 2024, prospects remain mixed, with slower export growth and reduced consumption posing challenges.

However, easing inflation and potential policy adjustments could help support the economy moving into 2025.

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