Private-sector economists predict Singapore’s growth for 2024 will remain at a median of 2.4%, according to the latest quarterly survey published by the Monetary Authority of Singapore (MAS) on June 12. While the overall forecast stays the same, expectations for manufacturing have decreased, with growth now anticipated at 1.6%, down from 4% in the previous survey. This adjustment reflects a lackluster performance in industrial production in early 2024, as noted by UOB senior economist Alvin Liew and DBS economist Chua Han Teng.

The median forecast for headline inflation has dropped to 2.8%, down from 3.1%, while core inflation remains steady at 3%. These expectations align with official government forecasts, which estimate GDP growth between 1% and 3% and both headline and core inflation between 2.5% and 3.5%.

The survey, conducted among 26 professional forecasters, received 20 responses. It indicates a positive outlook for finance, which is expected to drive growth due to anticipated credit demand and easing global interest rates. Improvements are also expected in wholesale and retail trade, as well as accommodation and food services.

However, forecasts for construction and manufacturing have dimmed. The expected growth for non-oil domestic exports has been revised down to 4%, from 6%. Nevertheless, the overall unemployment rate forecast remains at 2.1%.

For the second quarter of 2024, GDP growth is projected to be 2.7%, consistent with the first quarter. Headline inflation for Q2 is anticipated at 2.8% year-on-year, while core inflation is expected to remain at 3%.

Despite a weaker start to the year for manufacturing, forward-looking indicators suggest a potential recovery, especially in electronics, supported by a global tech upturn. The underlying demand fundamentals remain strong, bolstered by the structural impact of generative AI applications.

DBS and UOB project full-year GDP growth of 2.2% and 2.9%, respectively. Liew expresses optimism for the second half of the year, anticipating a “more meaningful recovery” if the Federal Reserve initiates a rate-cut cycle, potentially stimulating foreign investment and consumption.

Additionally, positive developments in electronics and spillovers from China’s recent economic measures are expected. However, growth in tourism-related sectors is likely to moderate.

Regarding monetary policy, most respondents expect no changes during the July meeting, with a mere 11.1% anticipating a reduction in the Singapore dollar nominal effective exchange rate (S$NEER) policy band. After a series of tightening moves from 2021 to 2022, MAS has maintained its policy in 2023 and 2024.

Economists highlighted geopolitical tensions as the primary downside risk to forecasts, with inflationary pressures and a potential external growth slowdown also raised as concerns. Conversely, robust growth in China and a quicker recovery in the tech cycle were cited as significant upside risks.