Singapore sees 2024 GDP growth

Singapore said it expects the island’s economy to expand between 2% and 3% this year, narrowing the forecast on a resilient external demand outlook despite lingering risks.

Singapore’s GDP grew

GDP increased by 0.4% in the three months ending in June compared to the previous quarter and expanded by 2.9% year-over-year. As a result, the city-state has adjusted its 2024 growth forecast to the upper half of the previously estimated 1%-3% range.

The second-quarter growth was mainly driven by the finance and insurance, and information and communications sectors. However, manufacturing experienced a contraction, primarily due to a significant drop in pharmaceuticals output within the biomedical manufacturing sector. Additionally, the annual growth rate in services-producing industries slowed to 3.7% from 4.3% in the previous quarter, according to the MTI.

“The projected recovery of the manufacturing sector, particularly the electronics cluster, is expected to benefit trade-related services sectors,” Gabriel Lim, MTI’s permanent secretary, said in a briefing after the release. “Meanwhile, the continued recovery in air travel and tourism demand will support growth in the aviation- and tourism-related sectors. Growth in the finance and insurance sector should also remain robust.”

What made the growth happen?

Growth in the second quarter was primarily fueled by the wholesale trade, finance and insurance, and information and communication sectors, according to the MTI.

The manufacturing sector contracted, mainly due to a decline in the biomedical manufacturing cluster, where pharmaceuticals output fell sharply. This downturn overshadowed the growth in the electronics sector, which benefited from strong demand for chips related to smartphones, PCs, and artificial intelligence.

Consumer-facing sectors, including retail trade and food and beverage services, also experienced a decline, partly due to increased outbound travel by locals.

Permanent secretary for policy Gabriel Lim said MTI is trying to improve Singapore's overall labor productivity performance. "The better off we are in raising labor productivity, then the more we can shift our ... trend growth a bit outwards."

Outlook for the world economy

U.S. economic growth is anticipated to slow, with consumption growth weakening due to a softer labor market. While investment growth may benefit from AI-related advancements, overall consumer spending is expected to decelerate.

In the Eurozone, GDP growth is likely to improve gradually, supported by a stronger rebound in consumer spending as price pressures ease and monetary policy becomes more accommodative. However, industrial activity and investment are expected to remain subdued for the remainder of the year.

Japan is projected to see an uptick in GDP growth, driven by rising wages and easing inflationary pressures that support private consumption.

China's economy is also expected to grow, although at a slower rate in the second half of the year.

Investment growth is expected to slow, but government support should stabilize the property market, and consumer sentiment is likely to improve. Southeast Asian economies are anticipated to experience growth driven by stronger domestic demand and a rebound in global electronics and tourism sectors.

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