MAS may loosen Singdollar policy on tougher 2025 growth outlook

SINGAPORE - Singapore’s economic growth beat estimates in the last three months of 2024 but slowed from the prior quarter.

This potentially provides scope for the central bank to slightly loosen monetary settings in 2025.

Gross domestic product (GDP) grew 4.3 per cent in the three months through December

from a year earlier, according to advance estimates released on Dec 2.

That beat the median analyst estimate of a 3.8 per cent gain, although it slowed from the 5.4 per cent growth in the July to September period.

Quarter on quarter, the economy grew 0.1 per cent against median expectations for a 0.8 per cent drop.

The government did not provide an outlook for growth in 2025, although it said in November it expects the economy to rise between 1 per cent and 3 per cent in 2025.

Bloomberg Economics estimates expansion in 2025 at 2.5 per cent, as Singapore’s resilience could be tested by offshore factors.

These range from China’s slowdown to trade tensions stirred by the incoming Trump administration and other geopolitical fissures.

“The more challenging outlook for growth in 2025 and beyond, in combination with heightened uncertainty, could see the central bank scale back its tightening by reducing the pace of appreciation in the Singapore dollar versus the currencies of its main trading partners,” Bloomberg economist Tamara Henderson said in a note after the data.

Singapore, she said, is in a sweet spot with both headline and core inflation now back below 2 per cent.

The core inflation rate fell to a three-year low of 1.9 per cent in November, creating room for the Monetary Authority of Singapore (MAS) to ease its Singdollar policy at its January review.

But analysts believe it might wait until later in 2025 to assess the impact of incoming US president Donald Trump’s policies.

MAS, which uses the exchange rate rather than interest rates to control price growth, left its settings on hold for a sixth straight review in October 2024.

Separately, Singapore private home prices rebounded.

Private residential prices rose 2.3 per cent in the fourth quarter from the prior three months, according to preliminary estimates from the Urban Redevelopment Authority.

That reverses a 0.7 per cent drop in the third quarter and is the largest increase in a year.

For full-year 2024, Singapore GDP rose 4 per cent, as announced by Prime Minister Lawrence Wong in his New Year message earlier this week.

That was the fastest pace in three years and surpassed the Government’s revised estimate of around 3.5 per cent, building a strong foundation for the Republic to confront challenges in 2025.

PM Wong’s speech on Dec 31 flagged both rising global tensions and, in many countries, “a deep sense of angst and anxiety” about the future.

“Singapore is not immune to these global mood shifts and pressures,” PM Wong said.

Still, “we remain a beacon of safety, security and stability in a troubled world”. BLOOMBERG