Singapore economy posted strong 4% growth in 2024
Singapore economy posted strong 4% growth in 2024
Notwithstanding the blockbuster year in 2024, the outlook for 2025 is still largely obscured by external headwinds including Trump 2.0 tariffs, US-China strategic rivalry, and geopolitical tensions.
Selena Ling
Chief Economist & Head of Global Markets Research and Strategy,
OCBC
Singapore economy posted strong 4% growth in 2024
The Singapore economy posted a 4% year on year (YoY) growth in 2024, the highest since 2021. This exceeded the official growth forecast and general market expectations and was partly attributed to the 4Q2024 growth momentum surprising at 4.3% YoY growth. 4Q2024 growth came in above Bloomberg’s consensus forecast of 3.8% YoY and our forecast of 3.1% YoY, although this was a moderation from the 5.4% YoY growth seen in 3Q2024.
Growth was broad-based
The growth support was broad-based, with manufacturing, construction and services growth still resilient at 4.2%. 5.9% and 4.3% YoY respectively in 4Q2024. For manufacturing and services growth, they also marked the fastest pace since 2Q2022 and 4Q2022 respectively as well as the strongest annual growth since 2021 and 2022. Note that 1Q and 2Q24 YoY GDP growth was also revised up to 3.1% and 3.2% respectively, while 3Q2024 growth was unchanged at 5.4%.
At the sectoral level, there were many growth levers to cheer about. In manufacturing, electronics and transport engineering continued to see output expansion in 4Q, whereas the biomedical cluster, especially pharmaceuticals, was more volatile. For construction, there was a pick-up in public sector construction activity. For the services sector, the wholesale & retail trade and transportation & storage industries led with 5.6% YoY growth in 4Q2024, followed by infocomms, finance & insurance and professional services at 3.7% YoY and accommodation & food services, real estate, administrative & support services and other services at 2.6% YoY.
The retail trade sector remained the laggard even as wholesale trade was bolstered by the machinery, equipment & supplies segments, and the transport & storage sector was supported by the storage & other support services, air and water transport segments.
Meanwhile, demand for IT & information services, head offices & business representative offices, as well as banking, fund management and payment activities saw sustained demand in 4Q2024. With the recovery in tourism and the festive holidays in 4Q2024, the accommodation and arts, entertainment & recreation segments also posted growth.
2024 ended on a strong note
All in, 4Q2024 marked a strong end to 2024 even though the manufacturing sector contracted by 2.5% QoQ seasonally adjusted (sa), partly due to the 3Q2024 momentum being quite exceptional at 11.1% YoY growth and 12.8% QoQ sa.
Meanwhile, URA flash estimates revealed that private property prices rose 2.3% QoQ in 4Q2024, rebounding from a 0.7% QoQ contraction in 3Q2024, led by non-landed property (3.2% QoQ) especially for Rest of Central Region (3.4% QoQ) and Outside Central Region (3.4% QoQ) followed by Core Central Region (2.4% QoQ). Private home transactions also amounted to 6,715 through mid-December.
Expect external headwinds in 2025
Notwithstanding the blockbuster year in 2024, the outlook for 2025 is still largely obscured by external headwinds including expected Trump 2.0 tariffs, US-China strategic rivalry, and geopolitical tensions.
The official 2025 GDP growth forecast also remained at 1-3% YoY. Due to the higher growth base in 2024, we have reduced our 2025 GDP growth forecast from around 2.7% YoY to 2.2% YoY. While there is increased optimism about improvement in the global electronics sector, trade sentiment may remain on edge as Trump is widely expected to enact wide-ranging and possibly punitive tariffs on trade with China and also the rest of the world.
While there is still significant uncertainty about the timing and magnitude of the anticipated tariffs, 1Q traditionally sees a moderation in activity due to the Chinese New Year holidays. While the broad manufacturing sector may find some mitigating support from additional global supply chain recalibrations, the electronics frontloading activity may possibly take a temporary breather.
The next milestone to watch will be Budget 2025 due on 18 February. PM Wong had highlighted in his New Year’s Day message that while global inflation has moderated, price levels have still not fallen and are not yet at pre-pandemic levels, hence more targeted help is on the way for older people and lower-income groups to cope with cost-of-living increases.
Apart from the cost-of-living challenge, job security and support for Singaporeans across different life stages are also likely to feature prominently, while not forgetting the business wish lists, especially from the SMEs who are still grappling with high costs and manpower challenges. Expectations are running high given this is likely to be the final budget for this term of government and Singapore marks its SG60 celebrations.
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