Singapore’s gross domestic product (GDP) grew by 2.9% in 2Q2024, according to the Ministry of Trade and Industry’s (MTI) advance estimates released on July 12. This is slightly slower than the revised rate of 3.0% growth notched in the previous quarter.
The 2Q2024 figure stands slightly ahead of market-watchers’ expectations of a 2.7% y-o-y growth in the Monetary Authority of Singapore’s (MAS) June 2024 survey of professional forecasters.
On a q-o-q seasonally adjusted basis, the economy expanded by 0.4%, slightly faster
than the revised 0.3% expansion seen in 1Q2024.
The manufacturing sector grew by 0.5% y-o-y in 2Q2024, reversing from the 1.7% y-o-y contraction seen in the previous quarter.
The construction sector expanded by 4.3% y-o-y, extending the 4.1% y-o-y growth in 1Q2024.
The wholesale & retail trade and transportation and storage sectors collectively expanded by 2.5% y-o-y in 2Q2024, moderating from the 3.9% growth seen in the quarter before.
See also: Singapore economy expected to grow by 2.7% y-o-y in 2Q2024
The group of sectors comprising the information & communications, finance & insurance and professional services sectors grew by 5.6% y-o-y in the 1Q2024, slightly slower than the 5.7% y-o-y growth notched in 1Q2024.
Growth of the remaining group of services sectors (i.e., accommodation & food services, real estate, administrative & support services and other services sectors) grew by 1.9% y-o-y in the 1Q2024, slower than the 3.0% growth in the preceding quarter.
Q-o-q, growth in the construction sector accelerated the most, at 2.4% in 2Q2024 after seasonal adjustments.
The preliminary GDP estimates for 2Q2024, including performance by sectors, sources of growth, inflation, employment and productivity, will be released in the Economic Survey of Singapore in August.
Analysts react
Selena Ling, chief economist and head of global markets research and strategy at OCBC, notes that the GDP figure beat the bank’s forecast for 2.7% y-o-y growth. “Notably, the turnaround was driven by output expansions across most of the manufacturing clusters, except for the biomedical manufacturing and precision engineering clusters.”
Looking ahead, Ling notes that the 2H2023 base is “relatively higher”, so growth momentum in 2H2024 may see some pullback to around the low 2% y-o-y handle.
“Nevertheless, we upgrade our full-year GDP growth forecast from 2.3% y-o-y to 2.6% y-o-y to account for the better-than-expected 1H2024 growth, which is closer to the top-end of the official growth forecast range,” says Ling.
Sheana Yue, economist at Oxford Economics, says the goods exports sector should continue to provide a “much-needed” boost to the economy thanks to the upturn in the global electronics chips cycle, “albeit not a massive one”. “However, it will be partly offset by subdued global growth. The lagged impact of monetary tightening will continue to weigh on demand from key western export markets even after policy rate cuts begin.”
Singapore's domestic demand is likely to stay sluggish, says Yue. “Softer labour demand and high interest rates are likely to deter investment and keep Singaporean consumers in cautious mode. Meanwhile, growth in tourism arrivals will start to moderate as its recovery matures, suggesting a smaller boost to GDP.”
Oxford Economics is upgrading its GDP growth forecast to 2.5% for this year, up from 2.2% previously 2.2%. “This largely reflects base effects as we have kept our growth trajectory of some modest pick-up in 2H2024 unchanged. It also suggests that the economy will grow largely in line with the trend growth, which we estimate to be 2.5%, and fall within the MTI's 1%-3% GDP growth forecast range this year.”
MAS will announce the decisions of its quarterly policy review later this month. OCBC’s Ling expects no change to the monetary policy settings, “given that core inflation remains sticky around the 3% y-o-y handle and will only subside more significantly from 4Q2024 onwards”.
