Singapore's economy grew 4.4% in 2024, beating forecasts and advance estimates

SINGAPORE: Singapore's economy grew 4.4 per cent in 2024, beating forecasts and an earlier estimate, the Ministry of Trade and Industry said in updated data released on Friday (Feb 14).

In January, the ministry said Singapore's economy grew 4 per cent in 2024, which already exceeded the forecast of around 3.5 per cent.

For the fourth quarter, the growth was revised from 4.3 per cent to 5 per cent. On a quarter-on-quarter seasonally adjusted basis, the economy grew 0.5 per cent, slower than the 3 per cent expansion recorded in the third quarter.

"Taking into account the performance of the economy in the fourth quarter, GDP growth came in at 4.4 per cent for 2024 as a whole, faster than the 1.8 per cent expansion in 2023," MTI said in a press release.

Figures for the first three quarters of 2024 were also bumped up from the previous Economic Survey of Singapore.

Growth for the year was mainly driven by the wholesale trade, finance and insurance, and manufacturing sectors.

In particular, the electronics cluster of the manufacturing sector and the machinery, equipment and supplies segment of the wholesale trade sector grew robustly due to the upturn in the global electronics cycle.

Growth in the finance and insurance sector was driven by elevated trading activity as the sentiment in the global and local financial market shifted. Net fees and commissions among banks and fund managers saw strong growth, said MTI.

"By contrast, the retail trade and food and beverage services sectors contracted, partly due to locals shifting their spending to overseas travel destinations," the ministry said.

Dr Beh Swan Gin, permanent secretary at MTI, noted that more than 600,000 Singapore residents visited Japan last year. 

"That's just an indication of how overseas travel leads to consumption overseas, which of course will then impact retail as well as food and beverage spending in Singapore," he said. 

OUTLOOK FOR 2025

MTI said the gross domestic product growth forecast for 2025 remains at between 1 per cent and 3 per cent.

Dr Beh said that the slower growth projected in Singapore should not have a major impact on wage and employment numbers.

"We will monitor these closely, but so far ... the vacancy rates, the unemployment levels, retrenchment levels, have all been very stable, so we don't see any cause for concern at this point," he said.

Singapore's external demand outlook for this year is broadly unchanged, with overall GDP growth in its key trading partners expected to ease from 2024 levels.

"There is a general slowing down, but they remain relatively resilient, so it is not like it's a sharp fall," said Dr Beh.

In the US, GDP growth is expected to moderate, in line with projections that private consumption growth will taper as tightness in the labour market eases.

"There is a large cone of uncertainty surrounding the outlook of the US economy, with its trajectory depending on the policies of the new US administration," MTI added.

On Thursday in the US, US President Donald Trump announced plans for "reciprocal tariffs" that could hit both allies and competitors.

"Whatever countries charge the United States of America, we will charge them," Trump said.

Ms Yong Yik Wei, chief economist at MTI, said the details of the reciprocal tariffs have not been worked out, and its impact should not be prejudged.

The steel and aluminium tariffs announced on Monday will have a "limited" impact on Singapore because Singapore's exports of those materials to the US make up a small proportion of its overall exports, she said.

The broader concern is that tariffs will have an indirect impact on Singapore'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," she said, adding that MTI is watching this closely and will study the details before making an assessment on the impact on the economy.

GLOBAL UNCERTAINTIES 

In the Eurozone, MTI expects GDP growth to improve on the back of stronger consumption growth and a gradual recovery in investments as monetary policy becomes more accommodative. 

China's GDP growth is expected to moderate, with merchandise exports to slow due to tariff hikes and investment growth to be limited by industrial overcapacity.

Key Southeast Asian economies should see steady growth supported by improving domestic demand and sustained recovery in tourism demand, said MTI.

But the uncertainties in the global economy remain significant, and risks are tilted to the downside.

"Ongoing trade frictions among major economies, alongside lingering risks of escalation in geopolitical conflicts, could lead to higher production costs, as well as greater global economic policy uncertainty," MTI said. That could dampen global investment and trade, weighing on global growth.

If disinflation is disrupted, financial conditions may also stay tight, potentially triggering vulnerabilities in banking and financial systems. 

In Singapore, the manufacturing and trade-related services sectors are expected to continue to expand, though at a slower pace than in 2024.

The electronics cluster is projected to be supported by robust demand for semiconductor chips in the PC, smartphone and data centre markets. 

The information and communications sector is expected to be supported by sustained demand for digital solutions and services from companies, while the finance and insurance sector will be bolstered by stronger demand for cross-border transactions in the region.

Consumer-facing sectors such as retail trade and food and beverage services are likely to see lacklustre growth, weighed down in part by locals shifting their spending overseas, though the recovery in international visitor arrivals should provide some support, MTI said.

NON-OIL DOMESTIC EXPORTS

In a separate release on Friday, Enterprise Singapore said non-oil domestic exports (NODX), a key exports indicator, grew 0.2 per cent in 2024, reversing a 13.1 per cent decline in the year before that.

The growth was due to higher shipments of electronic products, which rose by 8.2 per cent last year after contracting 19.7 per cent in 2023.

Non-electronic NODX decreased by 1.9 per cent, compared with a sharper decline of 11.1 per cent in 2023. The contraction in 2024 was primarily due to volatile pharmaceuticals and ships and boats segments.

For the fourth quarter, NODX rose by 2.4 per cent compared with the same period in 2023. In the third quarter, NODX grew 9 per cent.

Enterprise Singapore said the external outlook remains supportive of growth for global economy and trade in 2025, and maintained the forecast at 1 per cent to 3 per cent growth.

"Nonetheless, significant uncertainties arising from ongoing trade frictions among major economies could result in a more challenging and competitive trade environment, posing a downside risk to the NODX forecast," the agency said.