Singapore posts fastest growth in 18 months as outlook improves

SINGAPORE — Singapore's economy grew 2.7 per cent year-on-year in the first quarter of 2024, the quickest pace in 18 months, data showed on Thursday as the government said it expected manufacturing and trade-related sectors to improve over the course of 2024.

The growth matched a preliminary estimate released last month and was stronger than the 2.5 per cent forecast by economists in a Reuters poll. It was the fastest pace since the economy grew 4.1 per cent on a year-on-year basis in the third quarter of 2022.

Edward Robinson, deputy managing director of the economic policy group at the Monetary Authority of Singapore (MAS), said after the data that current monetary policy settings were appropriate.

"The prevailing rate of appreciation of the exchange policy band is needed to keep a restraining effect on imported inflation as well as domestic cost pressures," he said at a media briefing.

"We had assessed it to be sufficient to ensure medium-term price stability in the economy."

Separate data showed annual core inflation came in at 3.1 per cent in April, matching the rate in March.

The core rate is expected to gradually moderate before a more discernable step down in the fourth quarter, the MAS and Trade Ministry said. Both core and headline inflation were expected to average between 2.5 per cent and 3.5 per cent this year. The central bank left monetary policy settings unchanged at a policy review in April. The next policy review is due in July.

OCBC economist Selena Ling said MAS policy will likely remain unchanged for rest of the year. "They are still awaiting the easing in core inflation in the fourth quarter," she said.

While inflation has fallen from its peak of 5.5 per cent in early 2023, it remains stubborn amid slowing economic growth and had reached a seven-month high in February.

On a quarter-on-quarter seasonally adjusted basis, GDP expanded 0.1 per cent in the January to March period, in line with the preliminary estimate.

Leadership change

The trade ministry, which maintained its GDP growth forecast for 2024 at 1.0 per cent to 3.0, said the manufacturing and trade-related sectors were expected to see a gradual pick-up over the course of the year.

OCBC's Ling said first quarter data showed the economy was on track for full-year GDP to come in "slightly above the two per cent handle".

Non-oil exports for the trade-reliant economy have been falling, with an annual 9.3 per cent contraction in April and a 20.8 per cent contraction in March.

Enterprise Singapore said on Thursday its forecast for the year was for non-oil exports to be at +4.0 per cent to +6.0 per cent.

The trade ministry saw some risks, including geopolitical tensions disrupting supply chains and commodity markets, tight global financial conditions and emerging market volatility as policy cycles diverged from advanced economies.

The Asian financial hub has just had its first leadership change in two decades, with Lawrence Wong taking over as prime minister last week. In his inauguration speech, Wong said he was taking over at a challenging time globally. "As an open economy, our livelihoods will be hit when multilateralism fractures," he said.

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