Singapore’s economy expanded by 1.1% in 2023

The Ministry of Trade and Industry (MTI) of Singapore announced today that the nation’s economy expanded by 1.1% in 2023, a performance marking a deceleration from the 3.8% growth observed in 2022, even after its exit from the pandemic since February 2023.

Despite the moderation in growth, the MTI maintains an optimistic GDP growth forecast for 2024, projecting an expansion in the range of 1.0% to 3.0%.

Q4 2023 Economic Performance: A Closer Look

In the final quarter of 2023, Singapore’s economy experienced a notable acceleration, growing by 2.2% year-on-year, an improvement from the 1.0% expansion seen in the third quarter.

This growth was slightly more pronounced on a quarter-on-quarter seasonally-adjusted basis, with the economy expanding by 1.2%.

Sector-wise, the manufacturing sector rebounded with a 1.4% year-on-year growth after facing a 4.9% contraction in the previous quarter.

This positive turnaround was driven by expansions in the electronics, transport engineering, and chemicals clusters. Meanwhile, the construction sector saw its growth rate pick up to 5.2% year-on-year, bolstered by increased outputs in both public and private sector construction.

However, the retail trade sector contracted by 0.3% year-on-year, a downturn from the 2.3% growth in the preceding quarter, primarily due to a decline in non-motor vehicle sales volumes.

On the other hand, the transportation & storage sector improved, expanding by 2.8% year-on-year, thanks to robust growth in the air transport segment and water transport segment, supported by increased container throughput and total sea cargo handled at Singapore’s ports.

2023 Yearly Overview and Sectoral Insights

For the entirety of 2023, while the manufacturing sector experienced a contraction of 4.3%, the construction sector and services producing industries showed resilience.

The construction sector grew by 5.2%, an improvement from the previous year, and the services sector expanded by 2.3%, albeit at a slower pace than in 2022.

2024 Economic Outlook and Global Context

Looking ahead, the global economic outlook for 2024 appears largely unchanged since the Economic Survey of Singapore in November 2023.

Advanced economies are expected to see moderated growth in the first half of 2024 due to tight financial conditions, with a gradual recovery anticipated as inflationary pressures ease and monetary policies adjust.

The regional economies, particularly in Asia, are expected to witness growth, buoyed by the recovery in global electronics demand and continued recovery in tourist arrivals.

Specifically, Singapore’s manufacturing and trade-related sectors are projected to experience a gradual pickup in growth, in line with the global rebound in electronics demand. The continued recovery in air travel and tourism demand is also expected to bolster growth in tourism- and aviation-related sectors.

Despite these positive indicators, the MTI cautions of significant downside risks to the global economy, including geopolitical tensions, the potential for financial system vulnerabilities, and unexpected cost shocks that could disrupt the global economic recovery.

Speaking to reporters on the 2023 figures, Prime Minister Lee Hsien Loong said, “Growth was not quite as high as we would have liked, but it has been a steady year, and we avoided a recession. Next year, meaning 2024, we hope will be stronger than 2023.”