Singapore Anticipates Economic Growth in Second Half of 2024, According to Reuters

By Xinghui Kok

SINGAPORE (Reuters) – Singapore is anticipating a period of slow economic growth in the near future due to global uncertainties, although gradual improvements are expected in the latter half of 2024, according to the central bank’s report released on Monday.

In its semi-annual macroeconomic review, the Monetary Authority of Singapore (MAS) indicated that gross domestic product (GDP) growth, which came close to a technical recession earlier this year, is projected to improve steadily in the coming year, while core inflation is anticipated to decline by December.

"The third quarter of this year likely marked the turning point in the slowdown," the MAS stated.

According to advance estimates, GDP growth was recorded at 0.7% year-on-year in the third quarter. Singapore narrowly avoided technical recession, with the economy growing by 0.1% quarter-on-quarter from April to June, following a 0.4% contraction in the first quarter of 2023.

"Assuming no further shocks or setbacks in the global economy, the Singapore economy should benefit as the global tech industry gradually recovers and global interest rates stabilize throughout 2024," the report noted.

Additionally, MAS projects inflation to follow a general moderating trend, settling at an average of 2.5–3.5% for the entirety of 2024.

Core inflation, which excludes costs associated with private road transport and accommodation, has decreased from a 14-year peak of 5.5% in January to 3.0% in September.

The central bank highlighted both upside and downside risks related to inflation. "Unexpected fluctuations in global food and energy prices or domestic labor costs could exert additional inflationary pressures. Conversely, a sharper-than-anticipated downturn in the global economy might lead to an overall easing of cost and price pressures."

In light of these factors, MAS noted that the current appreciation of the Singapore dollar’s nominal effective exchange rate (S$NEER) is deemed sufficiently tight.

The central bank has maintained its monetary policy settings unchanged in April and October, following five successive tightenings since October 2021.

"The sustained appreciation of the policy band will continue to mitigate imported inflation and alleviate domestic cost pressures, thereby ensuring medium-term price stability," MAS added.