Singapore: GDP growth moderates in the fourth quarter
GDP growth loses impetus: According to an advance estimate, GDP growth moderated to 4.3% year on year in Q4 (Q3: +5.4% yoy). Despite the downtick, Q4’s reading exceeded market expectations. The result lifted 2024 GDP growth to 4.0%—four times 2023’s pace and the fastest expansion in three years. On a seasonally adjusted quarter-on-quarter basis, economic growth lost momentum, cooling to 0.1% in Q4 from the previous period’s 3.2% increase and marking the worst reading since Q1 2023.
Manufacturing sector weighs on growth: Looking at the details of the release, softer momentum in the goods-producing sector drove the downtick, decelerating to 4.4% in Q4 (Q3: +9.6% yoy): Manufacturing output growth more than halved, outweighing a stronger rise in the construction sector and hinting at a possible fading of the electronics sector upcycle. That said, the services sector rose 4.3% in Q4, improving from the 4.0% expansion logged in Q3. The acceleration was largely due to stronger momentum in the hospitality plus wholesale and retail trade subsectors.
A more detailed breakdown will be released in late February.
U.S. import tariffs to weigh on growth: Our panelists expect the economy to lose momentum from current levels through Q3 2025, as the temporary boost provided by front-loading sales ahead of U.S. import tariffs will gradually fade during 2025. Consequently, our Consensus is for GDP growth to cool from 2024’s high note. Private and public spending will decelerate, dampened by a high base of comparison and a gradual reduction in government cost-of-living support. That said, fixed investment is expected to gain momentum, bolstered by global interest rate cuts and the implementation of the Johor-Singapore Special Economic Zone.
Panelist insight: Commenting on the outlook, Nomura’s Euben Paracuelles and Charnon Boonnuch stated:
“We maintain our 2025 GDP growth forecast of 2.8%, near the top end of the official forecast range of 1.0-3.0% and reflecting our view that electronics exports will remain supportive of an expansion in manufacturing output in H1. Our forecast represents a moderation from 4.0% in 2024, owing to external demand pressures from global trade protectionism under Trump 2.0. Notwithstanding this, we think growth will remain resilient and above potential, as the FTA with the US and strong local wage and employment growth should provide some cushion against shocks from increased trade protectionism.”