Economists raise Singapore’s 2024 growth forecast to 2.4%; expect lower headline inflation of 3.1%: survey
Private-sector economists have slightly revised their projections for Singapore’s economic growth in 2024, while also adjusting their expectations for inflation downward, according to the latest quarterly survey released by the Monetary Authority of Singapore (MAS) on Wednesday (Mar 13).
The survey indicates a median forecast of 2.4% growth for 2024, a marginal increase from the previous forecast of 2.3%.
Economists expressed increased optimism regarding the manufacturing sector’s outlook, although projections for growth in accommodation and food services have deteriorated.
Headline inflation for 2024 is now anticipated to be 3.1%, down from the previous forecast of 3.4%, while the projection for core inflation remains unchanged at 3%.
The drop in headline inflation is attributed in part to a decrease in Certificate of Entitlement premiums, as noted by OCBC chief economist Selena Ling. However, the stable core inflation forecast suggests resilience in domestic prices, including essential services like public transport and healthcare.
DBS economist Chua Han Teng anticipates a recovery in real gross domestic product (GDP) growth to 2.2% this year, compared to 1.1% in the previous year. This is contingent upon improved performance in sectors oriented toward external markets such as manufacturing, wholesale trade, and financial services, with support also expected from travel-related services.
While the latest survey reflects a more positive sentiment compared to the previous one, forecasts remain in line with official projections for both GDP growth and inflation. The government expects GDP growth between 1% and 3% in 2024, with headline and core inflation ranging from 2.5% to 3.5%.
The survey, conducted among 26 professional forecasters on Feb 15, with 23 responses received, underscores their views and not those of MAS.
Compared to the December survey, economists predict higher growth for three out of five GDP components. Manufacturing is expected to grow by 4%, up from 2.3%, while forecasts for finance and insurance stand at 3.4%, an increase from 2.5%. Construction is also projected to grow by 4.9%, up from 4.7%.
Conversely, forecasts for wholesale and retail trade marginally decreased to 1.8% from 1.9%, attributed to cooling domestic labor market conditions. Growth expectations for accommodation and food services saw a sharper decline to 2.2% from 3.6%.
UOB associate economist Jester Koh suggests that activities in consumer-facing or tourism-related sectors may slow down due to diminishing post-pandemic demand, although factors such as the recovery in tourist arrivals from China and popular events could provide some cushion.
The forecast for non-oil domestic exports remained unchanged at 6%, while the expected overall unemployment rate for the year remained stable at 2.1%.
In Q1 2024, GDP is expected to rise by 2.6% year-on-year, with headline inflation predicted at 3.6% and core inflation at 3.4%.
Expectations of monetary policy loosening have shifted later into the year, with most respondents anticipating no change in April’s policy meeting. Only one respondent expects policy loosening in April, with expectations for such moves later in the year.
External growth remains a key risk to forecasts, with concerns about both downside risks of a slowdown and upside risks of better-than-expected growth. Geopolitical tensions were also highlighted as significant concerns amidst global economic uncertainty.
