Singapore economic growth slows in fourth quarter

Singapore's economy grew 2.2% year-on-year in the fourth quarter, falling short of earlier projections of 2.8% growth as manufacturing activity contracted, according to official data released on Thursday. While the reading represented a significant increase from the 1% growth in the previous quarter, it was below the government's initial estimates. Additionally, the full-year growth for 2023 was revised down from 1.2% to 1.1%, marking a decline from the 3.8% expansion in 2022.

Sectoral performance

The growth in 2023 was primarily driven by "other services industries," which saw a 3.9% year-on-year growth. Information and communications, as well as the transportation and storage sectors, also contributed to the overall growth of the economy. However, the manufacturing sector, a key economic driver, contracted by 4.3% in 2023, reversing the 2.7% growth in the previous year. On the other hand, the construction sector experienced an improvement, growing by 5.2% compared to a 4.6% expansion in 2022. The information and communications sector reported a 4.7% year-on-year growth, while the finance and insurance sector grew by 5.4%.

Outlook and risks

The Ministry of Trade and Industry maintained the GDP growth forecast for 2024 at 1% to 3%. It stated that Singapore's manufacturing and trade-related sectors are anticipated to experience gradual growth in line with the global electronics demand. The recovery in air travel and tourism demand is also expected to support the country's tourism and aviation-related sectors. However, the ministry cautioned that global economic headwinds persist, citing ongoing conflicts in Gaza and Ukraine, as well as the "lagged effects of monetary tightening," as potential concerns.

Currency and future developments

Following the data release, the Singapore dollar was trading at 1.347 against the U.S. dollar. The ministry advised that this is a developing story and encouraged stakeholders to stay tuned for further updates.

This comprehensive update reflects the latest insights into Singapore's economic performance, providing an overview of the key growth drivers, sectoral developments, and outlook for the future.