In a recent announcement by Singapore's Ministry of Trade and Industry, the country’s economy exhibited a remarkable performance in the fourth quarter of 2024, achieving a year-on-year GDP growth of 4.3%. This rate surpassed the market analysts' expectations, which were set at around 3.5%. While this figure represents a deceleration from the 5.4% growth seen in the third quarter, it nonetheless underscores the impressive resilience of Singapore’s economy amidst a challenging global contextAdditionally, the quarter-on-quarter growth also shone through, as Singapore's economy expanded by 0.1% compared to the prior quarter, laying the groundwork for a stable growth trajectory against the backdrop of a complex global economic environment.
Looking back over the entire year of 2024, Singapore achieved an overall economic growth of 4%. This outperformance far exceeded the initially revised forecast of 3.5%. Such feats not only highlight Singapore's adaptability in the face of a fluctuating international landscape but also establish a solid foundation for prospective economic developmentsIn examining sector-specific growth, the manufacturing sector reported an output increase of 3.5%, with the electronics industry, which constitutes nearly half of manufacturing sales, emerging as a key driver for overall growthThe resurgence of the electronics sector can be attributed to a rebound in global demand, with notable production growth recorded in integrated circuits (up 23.7%), magnetic disk media (up 117%), and personal computers (up 52.1%). The construction sector also displayed a robust performance, growing by 4.8%, primarily fueled by increased government infrastructure projects and rising demands from both public and private sectors, which provided strong support for growth in this industryAdditionally, the services sector saw an impressive expansion of 4.1%, with significant contributions emerging from finance and insurance, information and communication, transportation and warehousing, wholesale trade, tourism, and professional services, all showcasing a stable trajectory of development.
Despite these notable economic achievements in 2024, market sentiments remain somewhat skeptical regarding Singapore's economic outlook for 2025. Although specific economic growth forecasts for the upcoming year have yet to be disclosed, the government hinted last year that the growth could decelerate to between 1% and 3%. This forewarning suggests that Singapore could be grappling with dual pressures stemming from both external environments and internal structural adjustments
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Externally, the uncertainty surrounding global economic growth continues to escalate, compounded by rising geopolitical risks, a resurgence of trade protectionism, and the unpredictable policies of the new U.S. administration, all of which pose potential hazards for Singapore, an economy heavily reliant on international tradeShould the United States implement new tariff policies, Singapore's export-oriented industries could face severe repercussionsOn the internal front, local businesses are wrestling with challenges arising from persistently high labor costs, increasing uncertainty in consumer demand, and rapidly escalating rental costsSpecifically, 66% of companies reported facing challenges linked to labor costs, while the uncertainty surrounding customer demand surged from 30% in 2023 to an alarming 45% in 2024. Additionally, the proportion of firms encountering rental pressure rose significantly from 36% in 2023 to 43% in 2024.
From a broader perspective, the indications of slowing economic growth in Singapore do not necessarily herald a recession; rather, they reflect a normal adjustment period within the economic cycleThe slowdown in growth can be partially attributed to global economic uncertainties and persistent geopolitical risksWeakening global economic performance has led to reduced external demand for Singapore, placing pressure on its exportsAt the same time, easing domestic price pressures have also contributed to the overall economic cooling, albeit this situation may alleviate cost burdens for households and businesses, subsequently promoting a rebound in consumption and investment activitiesAs import cost pressures ease, businesses could see a reduction in production costs, which may incite them to expand production and investment; accordingly, consumer purchasing power could improve, thereby invigorating the consumption market.
On the monetary policy front, the Monetary Authority of Singapore (MAS), in its October review, underscored that the anti-inflation measures have borne significant results and are deeply entrenched within the economic framework
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