Singapore reported better-than-expected 2024 GDP growth but given looming uncertainties, economists have kept their 2025 forecasts flagging slower growth this year.
In 4Q 2024, Singapore's GDP grew 5%, bringing 2024 growth to 4.4%, a significant jump over 2023's 1.8%. However, growth was uneven, even within specific industries.
Citing external conditions, the Ministry of Trade and Industry has maintained its full-year 2025 forecast at between 1 and 3%.
"After much better economic growth in 2024, Singapore’s economy will be tested by rising global trade protectionism in 2025," says DBS economist Chua Han Teng.
HSBC economist Yun Liu believes that Singapore may not be directly targeted by the US, as it is the only Asean country that runs a trade deficit with the US.
However, trade turbulence will likely cloud its growth prospects, and lacklustre in some domestically-oriented services may also persist, she warns.
See also: MAS Review Group’s proposals may boost short-term returns, but will it be sustainable?
Furthermore, rising costs of living will remain a "key concern" even though inflation "has behaved well" in the past year.
"We expect more policy support to cushion the impact, and fiscal support is likely to do the heavy-lifting," says Liu, who expects Singapore's GDP to grow at 2.6%.
To this end, she expects the government to announce a "generous" budget on Feb 18 and MAS might ease further later in the year.
See also: STI gives up day’s gains to close 0.06% lower on Feb 24
UOB economist Jester Koh believes that front-loading of exports and production ahead of Trump’s tariffs should provide some near-term boost to the manufacturing and transportation & storage sectors.
However, there might be some "payback" towards the latter half of 2025.
"(The) current suite of US tariffs as well as China’s retaliatory tariffs on US imports is likely to have a limited impact on Singapore’s growth at this juncture and the current situation remains milder than our baseline assumptions, although trade uncertainty looms large and could escalate further," warns Koh.
Separately, Koh expects demand for construction in 2025 to be driven by large-scale developments such as the Changi Airport Terminal 5 where construction will start soon.
Tourism is getting some support from the government as well, says Koh, referring to the recent music video featuring UK band Coldplay that was filmed here "featuring Singapore’s rich tapestry of people and places."
Koh's 2025 GDP forecast is 2.5%, with risks to the downside.
