Singapore’s GDP growth slowed in Q4, achieving 4.0% in 2024, exceeding predictions. The 2025 growth forecast adjusted down to 2.2%, while downside risks increase from external tariffs.
Key View
- Advance estimates showed that real GDP growth slowed in Q4. However, 2024 growth of 4.0% was quicker than our forecast of 3.1% and 1.1% in 2023.
- With 2024 now a much stronger base of comparison, we have adjusted our 2025 growth forecast slightly downwards from 2.4% to 2.2%.
- Downside risks have built up considerably in recent months. Additional tariffs by the Trump administration, even if not targeting Singapore directly, would negatively impact the economy due to its openness to trade.
Advance estimates released on January 2 showed that Singapore’s real GDP grew by 4.3% y-o-y in Q4 2024 (BMI: 4.0%; Bloomberg consensus: 3.8%), slowing from 5.4% in Q3. This brings 2024 growth to 4.0%, quicker than our forecast of 3.1% and 1.1% in 2023.
We have adjusted our 2025 growth forecast slightly downwards from 2.4% to 2.2% (see chart below). Since we last reviewed our forecast in mid-October, our US and Mainland China teams have revised their 2025 growth projections from 1.5% to 1.9% and from 4.4% to 4.5% respectively, which should support exports from Singapore. However, 2024 has turned out to be a much stronger base of comparison and we now expect smaller declines in interest rates, which may limit the upside to investment and spending. Our forecast is slightly above the mid-point of the official forecast range of 1.0% to 3.0%.
Singapore’s economy is facing a more challenging outlook for 2025, as recent forecasts indicate a downward revision in growth expectations. The Monetary Authority of Singapore (MAS) has adjusted its growth projections, reflecting a combination of global economic uncertainty and domestic challenges. Factors such as inflationary pressures, supply chain disruptions, and geopolitical tensions are influencing this reassessment, prompting stakeholders to be more cautious in their expectations.
Analysts note that while Singapore has historically shown resilience in the face of economic fluctuations, the current global landscape presents unique hurdles. The ongoing effects of the COVID-19 pandemic, alongside inflationary trends in key sectors, contribute to a more precarious outlook. Singapore’s reliance on external trade amplifies these risks, as global demand remains volatile. Additionally, tighter monetary policies in major economies could lead to reduced investment flows into the city-state.
As Singapore adapts to these revisions, policymakers are urged to focus on fostering innovation and resilience within the economy. Emphasis on diversifying trade partnerships and investing in technology could help mitigate some of the risks associated with external dependencies. By proactively addressing these challenges, Singapore aims to sustain its economic stability and drive growth in the coming years, albeit at a more tempered pace than previously anticipated.
