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SINGAPORE: The Singapore economy is expected to grow by 1.0 to 3.0 per cent in 2024 after taking into account global factors and barring the materialisation of downside risks, according to the republic’s Ministry of Trade and Industry (MTI).
In a statement today, MTI said Gross Domestic Product (GDP) growth rates in major economies such as the United States (US) and eurozone are projected to slow further in the first half of next year due to continued tight financial conditions, before picking up gradually in the second half.
“At the same time, as the post-pandemic boost in demand for services dissipates, there could be a rebalancing of demand towards goods in the year ahead.
“This, alongside a normalisation of inventory levels, is likely to support a turnaround in global manufacturing activity over the course of the year. In particular, global electronics demand is projected to recover, which will bolster the growth of most regional economies,” it said.
MTI said that in the US, GDP growth is expected to moderate in the first half of 2024 as economic activity continues to be weighed down by tight financial conditions, before picking up in the second half in line with expectations of an easing of the monetary policy stance.
Similarly, GDP growth in the eurozone is forecast to remain subdued in the first half of 2024 due to restrictive financial conditions and sluggish external demand before improving in the second half, supported by a pickup in domestic consumption as inflation recedes.
Regarding Asia, the ministry said China’s growth is projected to remain sluggish in 2024 and come in lower than that in 2023 given sustained weakness in its property sector.
At the same time, domestic consumption and exports growth are likely to remain lacklustre in line with weak consumer confidence and sluggish external demand respectively.
On the other hand, GDP growth in the Southeast Asian economies of Malaysia and Thailand is expected to pick up, supported by an improvement in external demand for electronics and resilient domestic demand, it said.
Nonetheless, MTI noted that significant downside risks remain in the global economy.
Among others, sticky core inflation in advanced economies could induce central banks to maintain current high interest rates for longer, increasing strains to the global financial system.
“The confluence of these factors could weigh on both business and consumer sentiments along with demand, leading to a slowdown in global growth and trade,” it said.
Against this backdrop, the growth prospects of the manufacturing and trade-related sectors in Singapore are expected to improve in tandem with the turnaround in global electronics demand.
In particular, the electronics and precision engineering clusters are expected to benefit from a recovery in demand for semiconductors and semiconductor equipment, respectively, it said.
Similarly, growth in the wholesale trade sector is projected to strengthen on the back of an improvement in external demand for electronic components and telecommunications and computers.
If global interest rates start to moderate in 2024, the finance and insurance sector is also expected to post a modest recovery.
At the same time, MTI said, the continuing recovery in air travel and tourist arrivals will support the growth of aviation- and tourism-related sectors, including air transport and accommodation, although the pace of growth is likely to moderate.
Likewise, consumer-facing sectors such as retail trade and food and beverage services are projected to continue to expand amidst resilient labour market conditions, said the ministry. – Bernama
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