SINGAPORE’S economy grew 4.4 per cent in 2024, more than the advance estimate of 4 per cent, data from the Ministry of Trade and Industry (MTI) showed on Friday (Feb 14).
This accelerated from the 2023 full-year 1.8 per cent growth. But for 2025, MTI’s growth forecast range remains unchanged at 1 to 3 per cent.
The upward revision for 2024 came as fourth-quarter gross domestic product growth was adjusted upwards to 5 per cent year on year, from the advance estimate of 4.3 per cent. Still, it remained lower than the third quarter’s revised 5.7 per cent expansion.
Upward revisions were made for all four quarters of 2024, noted DBS economist Chua Han Teng.
On a quarterly, seasonally adjusted basis, the economy expanded 0.5 per cent in Q4, revised up from the advance estimate of 0.1 per cent. But this was still a slowdown from Q3’s 3 per cent growth rate.
Most economists held their 2025 GDP growth forecasts, which generally fall between 2 and 3 per cent.
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But Barclays economist Brian Tan raised his 2025 projection following the latest data, to 2.3 per cent from 2 per cent. He expects economic resilience to sustain GDP growth in the first half of the year, but projects a weaker H2 due to trade policy uncertainty and tariffs.
External outlook “broadly unchanged”
For 2025, MTI kept its growth forecast range unchanged at 1 to 3 per cent, “barring the materialisation of downside risks”.
The projected slower growth is not expected to have a major impact on wage and employment numbers, said MTI permanent secretary (development) Beh Swan Gin at a media briefing.
MTI said Singapore’s external demand outlook has remained broadly unchanged since its economic survey last November. Overall growth in key trading partners is expected to ease from 2024’s level.
US growth is tipped to moderate, though there is a “large cone of uncertainty” surrounding its outlook as the economy’s trajectory depends on the policies of US President Donald Trump’s new administration.
MTI chief economist Yong Yik Wei said that the impact of the recently announced “reciprocal tariffs” – of which details have yet to be decided – should not be prejudged.
Maybank economists Chua Hak Bin and Brian Lee think Singapore is unlikely to be significantly affected, given that its free trade agreement (FTA) with the US has eliminated duties on most goods.
UOB associate economist Jester Koh said front-loading exports and production ahead of Trump’s tariffs should provide some near-term boost to the manufacturing as well as transportation and storage sectors – but would likely lead to “some payback” towards the latter half of 2025.
Meanwhile, Barclays’ Tan said the potential consideration of non-tariff factors such as value-added taxes, non-tariff barriers and foreign exchange policies could mean that Singapore may eventually face reciprocal tariffs despite its FTA.
That said, it imports more from the US than the other way around, which could mean being less of a priority for US trade officials studying reciprocal tariffs, he added.
MTI’s Yong said the broader concern is US tariffs’ indirect impact on the city-state’s small and open economy. “The current sense is that there could be a small negative impact on the Singapore economy, arising from the current suite of tariff measures already implemented or being planned.”
Tan’s base case is for the Monetary Authority of Singapore (MAS) to stand pat this year following January’s policy easing. But he thinks it will consider a slight reduction in the slope of the Singdollar nominal effective exchange rate (S$NEER) if US tariffs threaten Singapore’s growth outlook by more than expected.
A steeper reduction to zero would likely occur if the central bank fears that tariffs “could push the output gap into significantly negative territory”, he added. A downward re-centring could also be possible, should global growth developments cause a shock “severe enough to unravel the labour market and send unemployment rates visibly higher”.
Considering the tame inflation outlook and rising global uncertainty, Maybank expects further monetary policy easing in April or July, via a slightly gentler S$NEER slope.
In contrast to the US, the eurozone’s GDP growth is expected to improve. China’s growth is expected to moderate, while key South-east Asian economies should post steady growth.
But MTI warned that uncertainties in the global economy remain significant, with the risks tilted to the downside.
Ongoing trade frictions – alongside lingering risks of escalation in geopolitical conflicts – could raise production costs and cause greater economic policy uncertainty globally.
“These could in turn dampen global investment and trade, and weigh on global growth,” it said.
Disruptions to the global disinflation process could also lead to tighter financial conditions for longer, potentially triggering vulnerabilities in banking and financial systems.
Singapore’s manufacturing and trade-related services sectors are expected to continue to expand in 2025, but more slowly than in 2024.
For 2024 as a whole, the manufacturing sector expanded by 4.3 per cent, a turnaround from the 4.2 per cent contraction in 2023. It was one of the main drivers of GDP growth, together with wholesale trade (5.1 per cent) as well as finance and insurance (6.8 per cent), MTI said.
In particular, manufacturing’s electronics cluster and wholesale trade’s machinery, equipment and supplies segment grew robustly, fed by the upturn in the global electronics cycle.
Going forward, electronics is anticipated to steadily expand, supported by robust demand for semiconductor chips for PCs, smartphones and data centres. This will spill over to the precision engineering cluster, as well as the wholesale trade sector’s machinery, equipment and supplies segment.
In transport engineering, strong order books in the aerospace and marine and offshore engineering segments should drive growth.
Outward-oriented services sectors should see healthy growth. Information and communications will be supported by sustained enterprise demand for digital solutions and services, while finance and insurance will be bolstered by demand for regional cross-border transactions.
However, consumer-facing sectors – such as retail trade and food and beverage services – will likely remain lacklustre, MTI said, weighed down in part by locals shifting their spending overseas, though tourist arrivals should provide some support.
