ECONOMIC OUTLOOK FOR 2024
MTI said that the external economic environment has remained resilient since the Economic Survey of Singapore in February 2024.
It pointed to “better than expected” economic growth in the United States and China in Q1 2024 that was due largely to stronger-than-expected domestic demand and external demand respectively.
“Growth in regional economies like South Korea and Taiwan was supported by the global electronics recovery, led by strong demand for AI-related chips,” said MTI.
The trade ministry predicted that GDP growth in the major economies would “taper gradually in the immediate quarters due to tight financial conditions, before picking up alongside anticipated policy rate cuts later in the year”.
MTI said that the US’ growth outlook improved slightly on account of the resilience in its labour market and an AI-led boom in investments.
“However, the robust performance of the US economy in the first quarter, coupled with sticky inflation, is likely to lead to a delay in policy rate cuts by the US Federal Reserve.”
Higher interest rates lasting longer will weigh on the US economy in the immediate quarters, before easing monetary policy in the later part of the year supports a pickup in growth, said MTI.
In the Eurozone, investments and industrial activity are expected to remain weak given restrictive financial conditions and sluggish external demand.
On the other hand, consumer spending is projected to see a firmer recovery in the second half of 2024 due to a gradual improvement in consumer confidence and anticipated policy rate cuts by the European Central Bank as inflationary pressures ease, MTI said.
Due to the introduction of more government support measures, China’s GDP growth is likely to be stronger than expected.
In particular, its manufacturing investment is expected to remain robust as a result of government support for strategic manufacturing industries and the announced trade-in programme, while infrastructure investment will be boosted by government infrastructure spending.
“In addition, recently-announced property market support measures are likely to help stabilise the property market, which should lead to a modest recovery in consumption in the later part of the year,” said MTI.
GDP growth in the majority of Southeast Asian economies is projected to be supported by resilient domestic demand, the continued recovery in tourism demand, as well as a pickup in external demand, it added.
