SINGAPORE – Singapore’s economy slows as global uncertainty and intensified trade after a stronger performance than expected in 2024.
On February 14, the Ministry of Trade and Industry (MTI) reported in its annual economic survey that the economy expanded at a faster pace of 4.4% in 2024 compared to previous estimates of 4%.
This was higher than the initial estimate of 4.3% as the economy rose 5% year-on-year in the fourth quarter of 2024.
However, MTI does not change its 2025 growth forecast changes from 1% to 3%, further escalation and higher uncertainty in geopolitical conflicts over US trade policy under President Donald Trump We have flagged down the downside risks from this.
The growth of anemia spreading over several quarters usually indicates a decline in the business environment and can conflict with job and wage growth. However, MTI’s permanent secretary, Beh Swan Gin, responded to a Strait-era question at the February 14 briefing, saying that there is still no expected significant impact on employment growth.
“So far, the vacancy rate, unemployment rate and reduction levels are all very stable, so we don’t see any source of concern at this point,” he said, and MTI closely monitors the situation. He added.
Singapore’s overall unemployment rate was 2% in 2024 compared to 1.9% in 2023. Meanwhile, the true median excluding inflation rose 3.4% in 2024.
MTI said: “Uncertainty in the global economy remains important and risks are leaning towards the negative side.
“There is a huge cone of uncertainty surrounding the outlook for the US economy, and its trajectory depends on the policies of the new US administration,” he added.
On February 13, Trump instructed officials to plan for all taxable duties on US imports, following a survey scheduled for completion by April 1, in his latest trade salvo. . A 25% tax was imposed on all steel and aluminum imports.
However, according to the US International Trade Agency, exports to Singapore attract no obligation, with few exceptions, due to the free trade agreement between the two countries.
Alcoholic drinks are not exempt for social reasons. Singapore also imposes excise taxes on automobiles, tobacco products and certain petroleum products due to environmental concerns, not just from the US, but also on all imports.
DBS Bank economist Chua Han Ten said that despite Singapore’s expectations of direct tariffs from the US, the possibility of US tariffs on its major trading partners is global. He said it remains indirectly vulnerable as it could lead to economic growth and slowing trade.
“Escalating global trade tensions presents the biggest downside risk to the full year outlook,” he said.
MTI said ongoing trade frictions among major economies, along with the prolonged risk of escalation in geopolitical conflicts, could lead to increased production costs. As global economic policy uncertainty increases, global investment and trade can be weakened and global growth can be considered.
Enterprise Singapore, according to a report in the Trade Review Report released on February 14, the Non-OLIOL Domestic Export (NODX) in line with the World Trade Organization’s faster commodity trade forecast in 2025, 1% It is expected to increase by 3%. Growth in 2025 and 2024.
However, the agency added that significant uncertainty in the global economy could place a negative risk to NODX forecasts by placing emphasis on global growth.
The report’s MTI highlights the risk that inflation will continue to rise for longer than previously expected.
This could lead to a tight financial position and potentially create potential vulnerabilities in banks and financial systems.
But Dr. Beh said it has always been difficult to project growth at the beginning of the year, and is now the case given the uncertainty of the measures Trump prioritizes.
“There are some policy moves that the US administration could introduce…and some may actually be positive about growth,” he said. He mentioned the potential for reducing US corporate tax rates that benefit the US economy.
“The impact on growth rates of our major trading partners will have an impact on Singapore,” Dr. Beh said, responding to questions announced so far about the impact of US tariffs.
MTI said Singapore’s manufacturing and trade-related services sector is expected to continue to expand in 2025, but the pace of growth is likely to be slacked from the 2024 level.
Within the manufacturing sector, electronics clusters are projected to expand at a steady pace, supported by the robust demand for semiconductor chips in computer, smartphones and data center end markets.
This has positive ripple effects on precision engineering clusters and machinery, equipment and supply segments in the wholesale sector. At the same time, a strong order book for the aerospace and marine and offshore engineering segments should drive the growth of transport engineering clusters.
Manufacturing expanded 7.4% year-on-year in the fourth quarter of 2024, expanding its growth of 11.2% in the last quarter.
According to MTI, the strong performance of the sector was driven by increased production volumes of electronics, transportation engineering and general manufacturing clusters.
However, on a quarterly seasonal adjustment basis, the sector recorded flat growth of zero percent, slowing from an 11.7 percent expansion in the last quarter. Over the course of 2024, manufacturing has expanded by 4.3%, a shift from the 4.2% contraction in 2023.
MTI said outward services sectors such as information and communications, finance and insurance are expected to register healthy growth. Meanwhile, growth in the retail and beverage services sectors may be partially reduced as local people move overseas.
In the fourth quarter, the information and communications sector grew at 4.2% year-on-year, slightly faster than the 4% expansion in the third quarter. Overall in 2024, the sector has grown by 5%, slowing from its 11.2% expansion in 2023.
The finance and insurance sector expanded 6.1% year-on-year in the fourth quarter, extending the 5.6% expansion in the last quarter. Over the course of 2024, the sector has grown by 6.8%, resulting from an expansion of 3.1% in 2023.
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