IMF projects Singapore’s GDP expansion to stand at 2.1 percent in 2024, 2.3 percent in 2025
(MENAFN) On Wednesday, the International Monetary Fund (IMF) projected Singapore's real gross domestic product (GDP) growth to be 2.1 percent this year and 2.3 percent next year. This forecast reflects a moderate recovery path for the city-state's economy, which experienced a slowdown to 1.1 percent growth in 2023. The deceleration was largely attributed to a contraction in the manufacturing sector, driven by a downturn in the global electronics cycle.
The IMF noted that economic growth began to rebound in the latter half of 2023, buoyed by improved global demand for semiconductors. This recovery trend strengthened further in the first quarter of this year, with GDP growth reaching 2.7 percent, supported by a resurgence in inbound tourism. The IMF's Staff Concluding Statement of the 2024 Article IV Mission highlighted that gradual disinflation is anticipated, with headline inflation decreasing to 2.7 percent in April 2024 and MAS core inflation dropping to 3.1 percent in the same month. This decline is attributed to easing inflation in food and tradable goods.
Despite these improvements, the IMF pointed out ongoing concerns about persistent services inflation. Inflation expectations for the next two years remain anchored at around 1.8 percent, according to consensus forecasts. Additionally, the IMF observed that Singapore's current account surplus has increased, driven by enhancements in the primary income balance. The country's banking sector continues to exhibit robust health, characterized by ample capital buffers, sound asset quality, high profitability, and strong liquidity.
The IMF also noted that non-bank financial institutions, including investment funds and insurers, have managed well under high interest rate conditions. The elevated borrowing costs have led the nonfinancial corporate sector and households to reduce debt, while the housing market experienced a moderate cooling in 2023. Overall, Singapore's economic indicators reflect a gradual but steady path towards recovery.
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