SINGAPORE (ANN/THE STRAITS TIMES) – Private-sector economists have retained their 2024 growth projection for Singapore but identified finance and insurance as the new primary growth sectors instead of manufacturing and exports. According to the quarterly survey by the Monetary Authority of Singapore (MAS) released on June 12, the forecasted GDP growth for 2024 remains at 2.4 per cent, consistent with the March survey.
However, expectations for the manufacturing sector’s growth were significantly reduced to 1.6 per cent, down from the previous 4 per cent. Similarly, the non-oil domestic exports growth projection was cut from 6 per cent to 4 per cent. In contrast, the finance and insurance sector’s growth forecast increased to 5.1 per cent from 3.4 per cent.
This downgrade for the manufacturing sector follows a sluggish economic expansion of just 0.1 per cent in the first quarter of 2024, the weakest growth since a 0.5 per cent contraction in early 2023. Manufacturing contracted by 5.4 per cent quarter-on-quarter in the first three months of 2024.
Enterprise Singapore also adjusted its 2024 key exports growth forecast to the lower end of its 4-6 per cent range due to a weak start to the year, with shipments declining by 3.4 per cent in the first quarter after a 1.4 per cent fall in the previous quarter.
The MAS survey highlighted geopolitical tensions as the most significant downside risk to Singapore’s export-reliant economy, along with inflationary pressures, a slowdown in external growth, and weaker growth in China. On the upside, a quicker-than-expected tech sector recovery was identified as the top potential boost for growth, alongside better-than-anticipated external growth, stronger growth in China, and easing inflation.
Most forecasters are optimistic that both all-items inflation and core inflation will decrease in 2024 compared to 2023. The median forecast for headline inflation is 2.8 per cent, down from 3.1 per cent in March, while core inflation is expected to remain steady at 3 per cent. The MAS anticipates headline and core inflation to average between 2.5 per cent and 3.5 per cent for the year.
Regarding the labour market, the unemployment rate is projected to be 2.1 per cent by the end of 2024, consistent with previous forecasts. The Ministry of Manpower reported an overall unemployment rate of 1.9 per cent for 2023, with a resident unemployment rate of 2.7 per cent.
Economists do not anticipate any changes to MAS’s current monetary policy stance in the upcoming reviews in July and October 2024. They also maintain a 2.5 per cent growth forecast for the Singapore economy in 2025.
