SIRC2023: Singapore’s economy set to emerge from stagnation

Singapore’s economic growth is projected to improve in the second half of next year after facing an “effective standstill” since late 2022, the Monetary Authority of Singapore (MAS) said.

Singapore should benefit as the global tech industry is gradually emerging from its trough and interest rates around the world level off, MAS said in its latest half-yearly macroeconomic review.

Growth rates across sectors are also moving toward their pre-COVID trends, the central bank said.

“For 2024, growth is projected to improve gradually in the second half of the year, and come in closer to its potential rate for the year as (a) whole,” the report said.

Economic growth for this year is expected to be in the lower half of the forecast range of 0.5 to 1.5 per cent. 

Domestic sectors grew more than usual after COVID-19 was declared endemic, though construction and food and beverage sales did not increase as quickly as before.

Travel-related industries reported double-digit growth rates as borders reopened after the pandemic. The number of international visitor arrivals rose to an average of 1.3 million per month in the third quarter, reaching 81 per cent of pre-COVID levels. Chinese tourists are now once again Singapore’s largest source of visitors.

Services like information and communications, architectural and engineering, and accounting segments performed well, but manufacturing and financial services suffered this year.

“The third quarter of this year likely marked the turning point in the slowdown,” MAS said. Manufacturing output has likely bottomed, and activity in financial services could pick up as interest rates peak.

Core inflation, which excludes accommodation and private transport, is expected to edge down to between 2.5 and 3 per cent by December. At the start of the year, the figure stood at a 14-year high of 5.5 per cent.

While there is monthly volatility for electricity and gas prices, food prices have continued to fall and consumer goods prices are lower, weighed down by manufactured goods prices, MAS said.