Economists keep Singapore’s 2024 growth forecast at 2.4%, but manufacturing outlook hit: MAS survey
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The forecast for growth in the key manufacturing sector was cut to 1.6 per cent from 4 per cent in previous survey.
PHOTO: ST FILE
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SINGAPORE - Private-sector economists maintained their 2024 outlook for Singapore, but switched the main drivers of growth from manufacturing and exports to finance and insurance.
Professional forecasters in the quarterly survey released by the Monetary Authority of Singapore (MAS) on June 12 forecast gross domestic product expanding at 2.4 per cent in 2024, unchanged from their forecast in the March survey.
However, they slashed their forecast for growth in the key manufacturing sector to 1.6 per cent, from 4 per cent in the previous survey. With the manufacturing outlook reduced, the pace of growth in non-oil domestic exports was cut to 4 per cent from 6 per cent.
Conversely, the finance and insurance sector was tipped to grow at 5.1 per cent, up from 3.4 per cent in the March survey.
The downgrade of growth expectations for Singapore’s export-driven manufacturing sector comes after the economy expanded by 0.1 per cent
The manufacturing sector shrank 5.4 per cent on a quarter-on-quarter seasonally adjusted basis in the first three months of 2024.
The Ministry of Trade and Industry in May maintained its 2024 growth forecast at 1 per cent to 3 per cent.
Also in May, Enterprise Singapore said the increase in 2024 key exports was likely to come in at the lower end of its 4 per cent to 6 per cent growth forecast due to a disappointing start to the year. Shipments fell 3.4 per cent in the first quarter of 2024, following a 1.4 per cent decline in the previous quarter.
The finance and insurance sector, however, will be supported by higher tourist spending. Meanwhile, the projected peaking of global interest rates will also support the banking and fund management segments through higher commissions and fees, analysts said.
Mr Chua Han Teng, an economist at DBS Bank, said: “We expect financial services to be supported by an uptick in credit demand, given the anticipated easing in global interest rates.”
In the MAS survey, spillovers from geopolitical tensions emerged as the most cited downside risk to the outlook for Singapore’s export-driven economy.
The economists also flagged inflationary pressures, slowdown in external growth and spillovers from weaker growth in China.
On the bright side, the faster-than-expected tech cycle recovery was flagged as the top factor that could see Singapore’s growth surprise on the upside.
Other upside factors cited were better-than-expected external growth, more robust growth in China and easing inflation, in that order.
Mr Chua said: “We also think that Singapore’s economy is on track for plus 2 per cent growth in 2024, with our forecast at 2.2 per cent. Singapore’s growth recovery for full-year 2024 versus 2023 will be mainly supported by a gradual improvement in external-led sectors, but with lingering downside global risks.”
Most of the forecasters remained hopeful that Singapore’s all-items inflation and core inflation – which excludes private transport and accommodation costs – would ease in 2024 from levels in 2023.
The median forecast for their all-items inflation, or headline inflation, for the whole of 2024 came in at 2.8 per cent, down from 3.1 per cent in the March survey.
Meanwhile, the median forecast for core inflation was at 3 per cent, unchanged from the previous survey.
MAS estimates that both headline and core inflation are likely to average between 2.5 per cent and 3.5 per cent in 2024.
For the labour market, the respondents to the survey expect the unemployment rate to come in at 2.1 per cent by the end of the year, unchanged from the previous survey.
Ministry of Manpower data shows overall unemployment averaged 1.9 per cent in 2023, while the resident unemployment rate came in at 2.7 per cent.
None of the respondents expected any change in MAS’ tight monetary policy stance in the upcoming July and October 2024 reviews.
The economists also maintained their forecast for the economy to grow by 2.5 per cent in 2025.
