Singapore’s economy concluded 2024 with stronger-than-anticipated growth, bolstering its ability to navigate global economic headwinds, including US tariffs and domestic cost-of-living concerns, particularly crucial in an election year.
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The Ministry of Trade and Industry reported a 5% year-on-year GDP growth in the fourth quarter of 2024, surpassing the initial 4.3% estimate and aligning with economists’ forecasts. This positive performance enhances Singapore’s resilience against challenges posed by China’s economic slowdown and escalating trade tensions fueled by US tariffs.
Strong Economic Performance in 2024
This robust finish contributes to a full-year GDP growth of 4.4%, the highest since 2021, exceeding both government projections and expert predictions. While quarter-on-quarter growth registered at 0.5%, slightly below the anticipated 0.8%, the overall annual performance underscores the economy’s strength.
Despite the positive momentum, the Ministry of Trade and Industry acknowledges potential negative impacts from US tariff measures, particularly given Singapore’s significant reliance on trade, which constitutes three times its GDP. Yong Yik Wei, the ministry’s chief economist, emphasized the ongoing assessment of these potential effects.
Navigating Global Economic Headwinds
The government maintains its 2025 growth forecast at 1%-3%, recognizing the evolving nature of global trade policies. While acknowledging the potential lagged effects of US tariffs, the ministry is actively monitoring the situation and will incorporate any significant developments into its 2026 forecasts.
The ministry anticipates continued expansion in Singapore’s manufacturing and trade-related services sectors in 2025, albeit at a potentially moderated pace compared to 2024. This cautious optimism reflects the prevailing uncertainties in the global economic landscape.
Domestic Challenges and Policy Responses
Despite the strong economic performance, rising living costs, particularly in housing and food, remain a significant concern for Singaporeans. Addressing these concerns is likely to be a priority for the ruling party in the lead-up to the general election scheduled for November.
Prime Minister Lawrence Wong is expected to unveil measures aimed at supporting vulnerable segments of the population and enhancing competitiveness in his upcoming budget speech. These initiatives are crucial for maintaining social stability and ensuring sustainable economic growth.
Expert Outlook and Monetary Policy
Bloomberg Economics anticipates a moderation in Singapore’s growth in 2025 due to its vulnerability to rising protectionism as a highly trade-dependent economy. Furthermore, Tamara Henderson of Bloomberg Economics suggests the Monetary Authority of Singapore (MAS), which recently shifted towards an easing monetary policy stance, might implement further loosening measures this year.
In January, the MAS adjusted its monetary policy by slightly reducing the slope of the Singapore dollar’s nominal effective exchange rate (NEER) policy band, signaling a slower pace of appreciation against its trading partners’ currencies. The MAS also revised its core inflation forecast downwards to 1%-2% for 2025. The central bank’s next policy meeting is scheduled for April.
Conclusion: Balancing Growth and Stability
Singapore’s strong economic performance in 2024 provides a solid foundation for navigating the challenges of 2025. However, the city-state must remain vigilant about global trade tensions and address domestic cost-of-living concerns. The government’s policy responses, particularly the upcoming budget, will play a crucial role in balancing economic growth with social stability in this election year. The MAS’s monetary policy decisions will also be critical in maintaining price stability and supporting sustainable economic growth amidst global uncertainty.
