Singapore 2024 growth up, but 2025 outlook uncertain

Singapore's economy expanded at a faster pace of 4.4 per cent in 2024 compared to an earlier estimate of 4 per cent, said the Ministry of Trade and Industry (MTI) on Feb 14.

This came as the economy grew 5 per cent year on year in the fourth quarter of 2024, higher than the initial estimate of 4.3 per cent.

However, MTI kept unchanged its slower growth forecast for 2025 at the 1 per cent to 3 per cent range, flagging downside risk from a further escalation of geopolitical conflicts and higher uncertainty over US trade policies under the new US president Donald Trump.

MTI said: "Uncertainties in the global economy remain significant, with the risks tilted to the downside."

"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," it added.

In his latest trade salvo, Mr Trump on Feb 13 directed officials to plan reciprocal tariffs on all levies on US imports. He has also raised tariffs on US imports from China by 10 per cent and levied a 25 per cent tax on all steel and aluminum imports.

MTI said that ongoing trade frictions among major economies, alongside lingering risks of escalation in geopolitical conflicts, could lead to higher production costs. Greater global economic policy uncertainty could in turn dampen global investment and trade, and weigh on global growth.

Enterprise Singapore in its trade review report, also released on Feb 14, said non-oil domestic export (Nodx) is expected to grow by 1 per cent to 3 per cent in 2025, in line with the World Trade Organisation's projections of faster merchandise trade growth in 2025 than in 2024.

However, the agency added that significant uncertainties in the global economy could weigh on global growth and pose downside risks to its Nodx forecast.

MTI in its report also highlighted the risk of inflation remaining elevated for longer than earlier expected. This could lead to tighter financial conditions, and potentially trigger latent vulnerabilities in banking and financial systems.

The ministry said the manufacturing and trade-related services sectors in Singapore are expected to continue to expand in 2025, although their pace of growth is likely to moderate from 2024 levels.

Within the manufacturing sector, the electronics cluster is projected to expand at a steady pace, supported by robust demand for semiconductor chips in the computer, smartphone and data centre end-markets.

This will have positive spillover effects on the precision engineering cluster and the machinery, equipment and supplies segment of the wholesale trade sector. At the same time, strong order books in the aerospace and marine and offshore engineering segments should drive growth in the transport engineering cluster.

The manufacturing sector expanded by 7.4 per cent year-on-year in the fourth quarter of 2024, extending the 11.2 per cent growth in the previous quarter.

The strong performance of the sector, according to MTI, was driven by output gains in the electronics, transport engineering and general manufacturing clusters.

However, on a quarter-on-quarter seasonally-adjusted basis, the sector posted flat growth of zero per cent, slowing from the 11.7 per cent expansion in the preceding quarter. For 2024 as a whole, the sector expanded by 4.3 per cent, a turnaround from the 4.2 per cent contraction in 2023.

MTI said the outward-oriented services sectors such as information and communications and finance and insurance are projected to register healthy growth. On the other hand, growth in the retail trade and food & beverage services sectors is likely to remain lacklustre, weighed down in part by locals shifting their spending overseas.

In the fourth quarter, growth in the information and communications sector came in at 4.2 per cent year-on-year, slightly faster than the 4 per cent expansion in the third quarter. For 2024 as a whole, the sector grew by 5.0 per cent, slowing from the 11.2 per cent expansion in 2023.

The finance and insurance sector expanded by 6.1 per cent year-on-year in the fourth quarter, extending the 5.6 per cent expansion in the previous quarter. For the whole of 2024, the sector grew by 6.8 per cent, picking up from the 3.1 per cent expansion in 2023.