Anticipating a promising future for Singapore’s economy, the Monetary Authority of Singapore (MAS) revealed its positive outlook in its recent macroeconomic review. The central bank expects robust GDP growth in 2024, leaning towards the upper end of the 2%-3% forecast range. This optimism extends to the following year, anticipating a similar growth trajectory. Let’s delve into the key insights of MAS’s report:
- Third-Quarter Surge: The MAS highlighted a substantial strengthening of economic growth in the third quarter. Factors contributing to this upsurge included a notable recovery in the manufacturing sector, increased financial sector trading activities, and the resurgence of Chinese tourists following a visa exemption rollout in February.
- GDP Data: Preliminary data for the third quarter indicated a significant 4.1% year-on-year GDP growth, a stark improvement from the 2.7% growth recorded in the previous quarter.
- Potential Risks: Despite the positive forecasts, the MAS cautioned about potential risks looming on the horizon. Heightened global uncertainties, such as the outcome of the upcoming U.S. presidential election and geopolitical tensions, could impact global trade and growth, consequently affecting Singapore’s economic prospects. Additionally, uncertainties surrounding the durability of the AI-led global tech cycle recovery pose a potential risk factor.
- Inflation Outlook: Despite a recent uptick in inflation to 2.8% in September, the MAS expects core inflation to ease to around 2% by the year-end. Looking ahead to 2025, the central bank anticipates core and headline inflation to average between 1.5% and 2.5%. This projection aligns with the progressive decline in inflation, leading to a more balanced assessment of risks compared to previous reviews.
The MAS concluded its review by maintaining its current monetary policy settings, signaling confidence in the economy’s resilience. As Singapore navigates through potential challenges on the horizon, the central bank’s strategic approach underlines a commitment to sustaining growth and stability.
