Singapore central bank expects GDP at upper end of 2%-3% range in 2024 and 2025

By Xinghui Kok

SINGAPORE (Reuters) – Singapore’s central bank said on Monday it expects 2024 gross domestic product growth at the upper end of the 2%-3% forecast range, and for next year to have a similar growth pace.

In its macroeconomic review released on Monday, the Monetary Authority of Singapore (MAS) said economic growth “strengthened decisively” in the third quarter and pegged the performance to recovery in the manufacturing sector, increased trading in the financial sector and the return of Chinese tourists after a visa exemption started in February.

Preliminary data showed Q3 GDP was up 4.1% year-on-year after posting 2.7% growth in Q2.

The central bank cautioned that 2025 has a risk of lower growth for Singapore, a trade-dependent regional financial hub, because of heightened global uncertainties.

“The outcome of the upcoming U.S. presidential election, an escalation in geopolitical tensions including in the Middle East, or a sharper slowdown in China could adversely affect global trade and growth, and in turn weigh on Singapore’s economic prospects,” said the MAS.

“Additionally, the durability of the AI-led global tech cycle recovery remains uncertain and could be sensitive to aggregate demand conditions.”

The MAS maintained that core inflation should ease to around 2% by the end of this year despite inflation rising to 2.8% on an annual basis in September after hitting a 2-1/2 year low of 2.5% in July.

It expects core and headline inflation to average 1.5%–2.5% in 2025.

“Given the progressive decline in inflation, the risks to Singapore’s inflation outlook are now assessed to be more balanced compared to previous monetary policy reviews,” said the MAS, which held its monetary policy settings again this month in its last review of the year.