Singapore Economy Grows 2.7%, Fastest in 18 Months, Outlook Brightens

23 May, 2024

Singapore Economy Grows 2.7%, Fastest in 18 Months, Outlook Brightens

Singapore's economy grew 2.7% year-on-year in Q1 2024, the quickest pace in 18 months, as the government expects manufacturing and trade-related sectors to improve throughout 2024.

The growth matched a preliminary estimate released last month and was stronger than the 2.5% forecast by economists in a Reuters poll. This was the fastest pace since the economy grew 4.1% year-on-year in Q3 2022.

Edward Robinson, deputy managing director of the economic policy group at the Monetary Authority of Singapore (MAS), stated that current monetary policy settings are appropriate to restrain imported inflation and domestic cost pressures. He emphasized the necessity of these settings for medium-term price stability.

Separate data showed annual core inflation at 3.1% in April, matching March's rate. The core rate is expected to gradually moderate before a more significant decrease in Q4. Both core and headline inflation are projected to average between 2.5% and 3.5% this year. The central bank maintained monetary policy settings in April, with the next review in July. OCBC economist Selena Ling expects MAS policy to remain unchanged for the rest of the year.

While inflation has decreased from its peak of 5.5% in early 2023, it remains high amid slowing economic growth, reaching a seven-month high in February. GDP expanded 0.1% quarter-on-quarter in Q1, aligning with preliminary estimates.

The trade ministry maintained its 2024 GDP growth forecast at 1.0% to 3.0%, expecting a gradual pick-up in manufacturing and trade-related sectors. OCBC's Ling suggested full-year GDP could exceed 2%. Non-oil exports have been falling, with annual contractions of 9.3% in April and 20.8% in March. Enterprise Singapore forecasts non-oil exports to grow between 4.0% and 6.0%.

The trade ministry highlighted risks such as geopolitical tensions, supply chain disruptions, tight global financial conditions, and emerging market volatility. Singapore, an Asian financial hub, recently experienced its first leadership change in two decades, with Lawrence Wong becoming prime minister. In his inauguration speech, Wong acknowledged the challenging global context.