An undated aerial view of Singapore’s Marina Bay at night.

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Singapore’s economy is expected to expand by 1% to 3% in 2024 on the back of an ongoing recovery in the travel and tourism industry, while the downturn in manufacturing and trade-related sectors could also be nearing an end.

The city-state’s third-quarter gross domestic product grew 1.1% year-on-year, beating advance estimates as well as analysts’ expectations, according to the Ministry of Trade and Industry.

Economists polled by Reuters had expected GDP growth of 0.7%, the same as advance estimates by the government. The economy had expanded by 0.5% in the second quarter year-on-year.

On a quarter-on-quarter, seasonally-adjusted basis, GDP grew 1.4%, sharply higher than the 0.1% increase seen in the previous quarter.

Following the results, MTI revised its Singapore GDP growth outlook for 2023 to “around 1%,” from 0.5% to 1.5% forecast earlier.

MTI also said that growth in the U.S. and the eurozone will moderate due to the cumulative effects of monetary policy tightening, while noting that the U.S. economy had fared better than expected since its Economic Survey of Singapore in August.

“Likewise, China’s growth is likely to slow further amidst ongoing weaknesses in its property sector and domestic consumption, as well as subdued external demand,” the ministry said.

The global electronics demand remains sluggish given elevated inventory levels and Singapore’s manufacturing and trade-related sectors are likely to remain weak for the rest of 2023 due to “subdued external demand,” MTI said. However, there are signs that the downturn could be nearing its end, it added.

An ongoing recovery in air travel and tourism is likely to support Singapore’s aviation- and tourism-related sectors such as air transport and accommodation. Resilient labor market conditions will also continue to support consumer-facing sectors including retail trade, and food and beverages.

‘From services to goods’

There could be a “rebalancing” from services to goods next year as the post-pandemic boost in demand for services dissipates, MTI said.

Normalization of inventory levels is also likely to support a turnaround in global manufacturing activity over the course of the year. In particular, global electronics demand will increase, benefiting Singapore’s electronics and precision engineering clusters.

By extension, growth in the wholesale trade sector is projected to strengthen on the back of an improvement in external demand for electronic components and telecommunications and computers.

“If global interest rates start to moderate in 2024, the finance & insurance sector is also expected to post a modest recovery,” MTI said.

Singapore expects GDP growth in the U.S. and the Eurozone to slow further in the first half of 2024, before picking up in the second half.

MTI also forecast that China’s growth would remain sluggish in 2024 and will be slower than in 2023, “given sustained weakness in its property sector.”

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