The Singapore economy may have outperformed official forecasts and market expectations in 2024, but economists see a more challenging outlook for growth in 2025.
The cautious stance comes as advance estimates from the Ministry of Trade and Industry (MTI) on Jan 2 show the economy expanded 4.3 per cent year on year in the fourth quarter of 2024.
While lower than the 5.4 per cent growth in the previous quarter, it beat the 3.8 per cent growth forecast by economists in a Bloomberg poll.
On a quarter-on-quarter seasonally adjusted basis, the economy expanded 0.1 per cent, down from the 3.2 per cent growth in the third quarter of 2024.
For full-year 2024, the economy grew 4 per cent, MTI said, reiterating the figure announced by Prime Minister Lawrence Wong in his Dec 31 New Year message.
This was the highest growth since 2021 and comes after 2023’s 1.1 per cent increase. It also beat MTI’s forecast of around 3.5 per cent made in November.
MTI did not give a new forecast for 2025 growth but said in November that it sees growth slowing to a range of 1 per cent to 3 per cent. It flagged downside risk from a further escalation of geopolitical conflicts and higher uncertainty over US trade policies under the incoming Trump administration.
OCBC Bank’s chief economist Selena Ling said 2024 was a “blockbuster” year, but the 2025 outlook is still largely obscured by external headwinds such as the anticipated Trump 2.0 tariffs, United States-China strategic rivalry and geopolitical tensions.
“Due to the higher growth base in 2024, we shade down our 2025 gross domestic product growth forecast from around 2.7 per cent year on year to 2.2 per cent year on year,” she said.
Standard Chartered Bank economist Jonathan Koh tipped 2025 growth at 2.5 per cent, with a caution that an uncertain global trade outlook may damage growth sentiment in trade-reliant places like Singapore.
DBS Bank economist Chua Han Teng maintained the bank’s 2025 growth forecast at 2.8 per cent.
He added that while Singapore’s economy has room for growth in 2025, there are considerable downside risks and uncertainties in the months ahead, such as intensification of geopolitical and trade tensions that could disrupt global production and raise costs.
The Straits Times
