The Ministry of Trade and Industry (MTI) of Singapore released data on Friday (February 14) indicating that the Singapore economy will grow by 4.4% in 2024, higher than the expected 4%.

This marks an acceleration from the 1.8% growth recorded for the full year of 2023. However, for 2025, MTI's growth forecast range remains unchanged at 1% to 3%.

The upward revision for 2024 comes as the year-on-year GDP growth rate for the fourth quarter was revised up from an estimated 4.3% to 5%. However, this figure is still lower than the revised 5.7% growth in the third quarter.

On a seasonally adjusted basis, the economy grew by 0.5% in the fourth quarter, higher than the expected 0.1%. Nevertheless, this remains below the 3% growth rate in the third quarter.

MTI stated that the main industries driving GDP growth for the full year were wholesale trade, finance and insurance, and manufacturing.

In particular, the electronics cluster in manufacturing and the machinery, equipment, and supplies segment of wholesale trade saw strong growth due to the recovery in the global electronics cycle.

At the same time, growth in the finance and insurance sector was driven by increased trading activity, spurred by changes in global and domestic financial market sentiment, leading to robust growth in net fees and commissions for banks and fund managers.

In contrast, retail trade and food and beverage services experienced contractions, partly due to locals redirecting their spending toward overseas travel destinations.

External Outlook "Largely Unchanged"

For 2025, MTI has maintained its GDP growth forecast range at 1% to 3%, "barring downside risks."

This figure takes into account both external and domestic environments. MTI noted that Singapore's external demand outlook has remained largely unchanged since the last economic survey in November last year.

Overall growth in major trading partners is expected to be lower in 2025 compared to 2024. U.S. economic growth is projected to remain moderate, but its outlook still carries "significant uncertainty," as the economic trajectory depends on the policies of the new administration under U.S. President Donald Trump.

On the other hand, GDP growth in the Eurozone is expected to improve.

In Asia, China's economic growth is projected to slow, while major Southeast Asian economies are expected to achieve steady growth.

However, MTI warned that global economic uncertainties remain significant, with risks tilted to the downside.

Ongoing trade frictions among major economies, coupled with lingering risks of escalating geopolitical conflicts, could drive up production costs and exacerbate global economic policy uncertainty.

The report stated, "This, in turn, could dampen global investment and trade and weigh on global economic growth."

A disruption in the global disinflation process could also lead to tighter financial conditions for a prolonged period, potentially triggering vulnerabilities in the banking and financial systems.

Given the uncertainties and downside risks in the U.S., "we are more concerned that (GDP growth) figures may end up at the lower end of the range," said Beh Swan Gin, Permanent Secretary (Development) at MTI, during a press briefing, although he maintained the forecast range.

Regarding the recent U.S. tariffs on steel and aluminum, MTI Chief Economist Yong Yik Wei said the impact on Singapore is likely to be limited.

She added that the broader concern is the indirect effects of tariffs, given Singapore's small and open economy. "The current sentiment is that the series of tariff measures already implemented or planned may have a slight negative impact on Singapore's economy."

Sectoral Outlook for 2025

In 2025, Singapore's manufacturing and trade-related services sectors are expected to continue expanding, albeit at a slower pace than in 2024.

Within manufacturing, the key electronics cluster is expected to grow steadily, supported by strong demand for semiconductor chips from personal computers, smartphones, and data centers. This will spill over into the precision engineering cluster and the machinery, equipment, and supplies segment of the wholesale trade industry.

In the transport engineering sector, growth will be driven by strong order books in aerospace, marine, and offshore engineering.

Meanwhile, externally oriented services should see healthy growth. Continued corporate demand for digital solutions and services will drive growth in the information and communications sector, while demand for regional cross-border transactions will boost the finance and insurance sector.

However, MTI noted that consumer-facing industries such as retail trade and food and beverage services are likely to remain subdued. Growth in these sectors will be partly affected by locals redirecting spending overseas, although tourist arrivals should provide some support.