SINGAPORE: Singapore’s economy outperformed expectations in 2024, but economists are warning that 2025 could be more challenging. According to the Ministry of Trade and Industry (MTI), the economy grew by 4.3 per cent in the fourth quarter of 2024 compared to the same period in the previous year.
This was lower than the 5.4 per cent growth in the third quarter (Q3) but still above the 3.8 per cent forecast from economists surveyed in a Bloomberg poll. On a quarter-to-quarter basis, the economy grew 0.1 per cent, down from 3.2 per cent in the third quarter.
For the whole of 2024, Singapore’s economy grew by 4 per cent, which was higher than the 1.1 per cent growth in 2023 and better than the MTI’s November forecast of 3.5 per cent. This marks the highest growth since 2021.
However, the outlook for this year is less certain. According to The Straits Times, MTI has not updated its growth forecast, but it had previously predicted a slowdown, expecting growth to be between 1 per cent and 3 per cent, due to concerns about geopolitical tensions and possible changes in US trade policies under the incoming Trump administration.
OCBC Bank’s chief economist, Selena Ling, called 2024 a “blockbuster” year but warned that 2025’s growth could be affected by factors like the expected tariffs under the Trump administration, as well as the ongoing trade issues between the US and China.
She said that because of the higher growth base in 2024, they are lowering their growth forecast for 2025 from 2.7 per cent to 2.2 per cent, though she acknowledged potential optimism in the global electronics sector.
She added that while the timing and impact of the anticipated tariffs are uncertain, the economy usually slows down in the first quarter because of the Chinese New Year holidays. She also mentioned that Budget 2025, due on Feb 18, is expected to focus on helping people with the cost of living and job security.
Standard Chartered Bank economist Jonathan Koh expects Singapore’s economy to grow by 2.5 per cent in 2025, though he cautioned that global trade uncertainty could dampen sentiment in Singapore, which is highly dependent on trade.
DBS Bank economist Chua Han Teng kept his forecast at 2.8 per cent for 2025 but noted that geopolitical and trade tensions could impact growth.
In the fourth quarter of 2024, the services and construction sectors helped support the economy’s growth.
The wholesale and retail trade, along with the transportation and storage sectors, grew by 5.6 per cent year-on-year (YoY) in Q4, continuing the 5.2 per cent growth seen in the previous quarter. The retail industry, however, was the only segment in this group to see a decline.
The construction sector expanded by 5.9 per cent YoY, driven by public sector projects. This was an improvement from 4.7 per cent in the third quarter. Meanwhile, manufacturing grew by 4.2 per cent, driven by the electronics and transport engineering sectors, although the growth was slower than the 11.1 per cent rise in the previous quarter.
Other sectors such as information and communications, finance and insurance, and professional services saw slower growth in Q4, dropping from 4.3 per cent in the third quarter to 3.7 per cent in the fourth quarter.
Accommodation and food services, real estate, administrative and support services, and other services grew at a faster rate, with a 2.6 per cent increase in Q4, up from 1.4 per cent in the previous quarter.
Barclays economist Brian Tan pointed out that manufacturing activity, which saw a strong increase in Q3, is at risk of further normalisation or slowing.
He raised his growth forecast for 2025 slightly from 1.8 per cent to 2 per cent but remained cautious about the longer-term outlook, given the uncertainties around global trade tensions, “a particularly acute pain point for ultra-open Singapore”, he said. However, he kept Barclays’ 1.5 per cent forecast for 2026. /TISG
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