The Ministry of Trade and Industry said that Singapore’s economy will grow between 1% and 3% in 2024, as the trade-related sector improves modestly.

MTI’s latest quarterly economic report said that growth in 2023 is expected to be around 1% due to weak export demand.

The forecast has been lowered from a range of 0.5 to 1.5 percent announced in August. It is also much lower than the prediction made at the beginning of the year of 0.5 to 2.5 percent.

MTI said that the gross domestic product increased by 1.1 percent year-on-year in the third quarter. This was faster than the growth of 0.5 percent in the second quarter or the 0.4 percent in the first quarter of 2023. MTI’s estimate of 0.7 percent was also higher than the actual growth rate.

Analysts believe that a better than expected result in the third quarter may be a sign that the economy is stabilising after the anaemic first half. This could also be a sign of a possible recovery into 2024.

The economy expanded by 1.4 percent on a quarterly basis seasonally adjusted, up from 0.1 percent in the second quarter.

The recovery of air travel and tourism inbound has boosted sectors like air transport and accommodations. The resilient labour market continues to support consumer-facing industries like retail trade, food and beverage services and accommodation.

The overall growth has been held back by the combined effects of higher interest rate and a Chinese economy that is slower than expected.

MTI has projected that the GDP growth rate in major economies like the United States and the Eurozone will slow down in the first six months of 2024 due to the continued tightening financial conditions. Then, it is expected to pick up in the second.

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Along with a normalisation in inventory levels, this is likely to support an improvement in global manufacturing over the course the year. Global electronics demand will likely recover in particular, which is expected to boost the growth of many regional economies.

Enterprise Singapore predicted on November 22 a modest rebound for key exports by 2024, after cutting its forecast for 2020 due to a poorer-than-expected performance.

The government now expects that the key non-oil exports (Nodx), which are largely unrelated to oil, will shrink by between 12 and 12.5 percent in 2023. This is compared to August’s prediction of a contraction of 9 to 10 percent.

Nodx will rise between 2 and 4 percent in 2024 in line with the anticipated turnaround in global electronic demand.

Core inflation, which excludes volatile energy and food costs, could encourage central banks to keep interest rates high for longer. A resurgence of supply disruptions or commodity price shocks could also be caused by an intensification or widening in the Israel-Hamas conflict, or war in Ukraine.

Confluence of factors such as these could affect both consumer and business sentiments, along with the demand for goods and services. This would lead to a decline in global trade and growth.

The manufacturing sector contracted by 4.6% in 2023’s third quarter, compared to the 7.6% contraction that occurred the quarter before. The sector as a whole contracted, except for the transport engineering cluster.

Construction output in both the public and private sectors increased by 6.3 percent, continuing the 7.7 percent growth seen in the second quarter.

The growth in the sector of information and communication slowed to 5.6%, down from 7.6% in the second quarter. Real estate grew by 3.4 percent, a slowdown from the 12.1% growth in the second quarter.