Singapore's Q4 GDP accelerates on strong performance in construction

Singapore experienced a faster-than-expected economic growth of 2.8 per cent year-on-year in the fourth quarter of 2023, driven by improvements in construction and manufacturing, according to preliminary government data released on Tuesday.

This growth surpassed the 1 per cent expansion recorded in the third quarter of the same year. For the full year of 2023, Singapore's economy grew by 1.2 per cent, showing a moderation compared to the 3.6 per cent growth in 2022.

Economists had anticipated a lower growth rate, with OCBC economist Selena Ling expecting a 1.8 per cent expansion and Maybank economist Chua Hak Bin anticipating 2.5 per cent. 

Both economists acknowledged the better-than-expected performance and expressed optimism for the future. Maybank's Chua mentioned that "green shoots are sprouting in exports and manufacturing," brightening the economic outlook for 2024, with an expected GDP growth of 2.2 per cent. OCBC's Ling projected a growth range of 1-3 per cent for 2024, aligning with the trade ministry's forecast.

Despite the positive indicators, Ling highlighted uncertainties, such as the possibility of a US recession, potential Federal Reserve rate cuts, and geopolitical developments, which could influence the growth momentum in 2024.

On a quarter-on-quarter seasonally adjusted basis, Singapore's GDP expanded by 1.7 per cent in the October to December period, following a 1.3 per cent expansion in the third quarter. 

The Monetary Authority of Singapore (MAS) is set to review monetary policy no later than January 29, with the central bank having increased the frequency of reviews to quarterly starting in 2024. 

In October, the MAS had maintained policy settings unchanged as inflation in Singapore moderated. Core inflation in the city-state slowed to 3.2 per cent in November 2023, down from a peak of 5.5 per cent in January and February of the same year.

(With Reuters Inputs)