- 4Q23 advance GDP growth picked up to 2.8% YoY, 1.7% QoQ sa
- Manufacturing and construction lifted YoY growth in 4Q, while services stayed resilient overall
- 2024’s growth recovery will be external-led, but is likely fragile, given global uncertainties
- Implications for our forecast: We maintain our 2.2% growth forecast for full-year 2024
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Singapore’s economy endured a challenging 2023, but is poised to recover in 2024, in our view. Advance estimates (AE) showed a slowdown in full-year 2023 real GDP growth to 1.2%, from 2022’s 3.6%. Yet, looking into the quarterly GDP figures, we see signs of an emerging recovery. 4Q23 overall growth ticked up to 2.8% YoY from 3Q23’s revised 1.0% YoY, lifted by manufacturing and construction, while services stayed resilient overall. 4Q23 sequential growth picked up to 1.7% QoQ sa vs 3Q23’s 1.3% QoQ sa, performing better than the stagnation between 4Q22 and 2Q23.
We maintain our 2.2% growth forecast for full-year 2024. The recovery from 2023 will be mainly external-led, but is likely fragile, given lingering global uncertainties. Our forecast is in line with the Ministry of Trade and Industry (MTI) 1.0-3.0% forecast range.
Manufacturing, a key sector to watch, is turning around, after being in the doldrums and weak for most of 2023. 4Q23’s factory activity accelerated by 9.0% QoQ sa from 3Q23’s 0.3% QoQ sa. This translated to 3.2% YoY increase in 4Q23, reversing the previous four quarters declines, and registering the fastest YoY expansion since mid-2022. Output expanded across all clusters, except for precision engineering. We continue to expect better manufacturing prospects and modest expansion in 2024, in tandem with the cyclical but uneven improvement in the global electronics cycle.
While manufacturing was a drag for full-year 2023, the robust construction and diversified services sectors supported the overall economy in 2023. For construction, real output expanded for the 11th straight quarter, accelerating by 9.1% YoY in 4Q23 to end 2023 at 7.7%, supported by both public and private activities. In our view, a healthy project pipeline, especially in public housing, will likely sustain construction growth over the coming quarters, notwithstanding manpower and cost challenges.
Regarding services, overall YoY expansion looked resilient in 4Q23, with 2.4% increase. This was close to 3Q23’s 2.3% YoY increment, even though 4Q23’s sequential growth was flat vs the previous two quarters’ ~1% QoQ sa expansion. We see differing performance across services clusters, with shifting trends, and expect overall services growth to hold up in 2024. Services business expectations for the next six months for Oct 2023 to Mar 2024 inched up further and remain positive for the 12th straight reading, highlighting the sector’s resiliency. In fact, no services clusters registered net negative expectations.
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