Singapore’s economy expands by 0.4% in Q2 on a seasonally adjusted, quarterly basis

SINGAPORE: The Ministry of Trade and Industry (MTI) on Tuesday (13 August) revised Singapore’s GDP growth forecast for 2024, narrowing it to a range of 2.0% to 3.0%, up from the earlier projection of 1.0% to 3.0%.

In the second quarter of 2024, Singapore’s economy expanded by 2.9% on a year-on-year basis, slightly below the 3.0% growth recorded in the first quarter.

Quarter-on-quarter, the economy maintained steady growth at 0.4%, consistent with the previous quarter. For the first half of 2024, the average GDP growth stood at 3.0% year-on-year.

MTI attributed the year-on-year growth in the second quarter primarily to robust performances in the wholesale trade, finance & insurance, and information & communications sectors.

However, the manufacturing sector faced challenges, with a notable contraction in biomedical manufacturing due to a sharp decline in pharmaceuticals output.

Despite these challenges, the electronics industry showed signs of recovery, driven by strong demand for smartphones, personal computers, and artificial intelligence-related chips. However, demand for automotive and industrial chips remained weak.

On the other hand, consumer-facing sectors such as retail and food & beverage services experienced a contraction, partly attributed to increased outbound travel by locals.

Looking ahead, MTI remains cautiously optimistic about the external demand outlook for the remainder of 2024.

Mr Gabriel Lim, MTI’s permanent secretary for policy, noted that while GDP growth in major economies like the US and China is expected to ease gradually, improvements are anticipated in the eurozone, Japan, and key Southeast Asian economies.

China’s economic growth is projected to slow slightly in the second half of 2024 due to tapering investment growth amid overcapacity in certain sectors.

However, MTI expects consumer sentiments in China to improve as the property market stabilizes with government support measures.

In Southeast Asia, growth is expected to pick up modestly in the latter half of the year, driven by stronger domestic demand and the continued recovery in global electronics and tourism sectors.

Nevertheless, Mr Lim warned of potential downside risks in the global economy, including the intensification of geopolitical and trade conflicts, which could dampen business sentiments and increase production costs, thereby weighing on global trade and growth.

“Disruptions to the global disinflation process could lead to tighter financial conditions for longer, and trigger market volatility or latent vulnerabilities in banking and financial systems,” the statement wrote.

Against this backdrop, Singapore’s manufacturing sector is anticipated to recover gradually in the second half of 2024.

The electronics industry is expected to lead this recovery, bolstered by robust demand for smartphone, PC, and AI-related chips. This growth is also expected to benefit the precision engineering industry.

Additionally, the chemicals industry is forecasted to continue its expansion, supported by increased production in petrochemicals and specialty chemicals.

Conversely, the biomedical manufacturing sector is likely to remain under pressure, with pharmaceuticals output expected to stay weak for the rest of 2024.