Singapore anticipates accelerated economic growth, decreasing inflation in 2024-2025

Singapore expects economic growth to accelerate over the next two years and inflation to slow, the Asian Development Bank (ADB) said on April 11.

Forecasts for gross domestic product (GDP) growth vary from source to source, but overall the figure remains high. The ADB said Singapore expects GDP growth of 2.4 percent in 2024, up from 1.1 percent in 2023. Singapore’s Ministry of Trade and Industry (MTI) forecasts GDP will grow 1-3 percent in 2024, while the International Monetary Fund projects Singapore’s growth to be 2.1 percent in 2024.

MTI’s preliminary estimates, which were released today (April 12), showed Singapore’s economy grew by 2.7 percent year-on-year in the first quarter of 2024. This was faster than the 2.2 percent growth recorded in the final quarter of 2023.

The growth momentum is also expected to continue into 2025, with the GDP growth rate likely to increase to 2.6 percent in the coming year.

Singapore, as one of the region’s export-oriented economies, will benefit from rising global demand, especially for exports of high-tech products such as semiconductors, according to ADB chief economist Albert Park. This growth will be driven by two factors: the end of interest rate hikes in most countries and the continued recovery in commodity exports following a rebound in the semiconductor cycle.

Lower living costs with increased housing supply, lower private transport costs with lower oil prices and normalization of food prices and service costs will be major factors in reducing inflation in the country. It is expected to fall to 3 percent in 2024 and 2.2 percent in 2025.

MAS expects headline and core inflation (excluding private accommodation and transport costs) to be between 2.5 percent and 3.5 percent in 2024.

A decline in inflation in Singapore to 2.2 percent in 2025, forecast by ADB principal economist John Beirne, fits into the general trend for Southeast Asia. In the region, inflation is expected to slow from 4.1 percent in 2023 to 3.2 percent in 2024 and then to 3 percent in 2025.

Forecasts for Asian economies in 2024 are generally optimistic, but risks remain that could negatively impact their growth.

One of the main risks is a delay in the US Federal Reserve’s interest rate cut cycle. If rates remain high longer than expected, it could weaken global demand and investment flows, weighing on growth in Asia.

Another risk is the disinflationary momentum, which could be disrupted by geopolitical tensions or adverse weather events. For example, conflict in the Middle East has already caused problems with shipping in the Red Sea, an important trade route between Europe and Asia. Severe weather events can also disrupt global supply chains and cause commodity prices to rise.