Services sector key to Singapore's 2024 growth

In 1Q24, all services-producing industries recorded YoY expansions.

Experts believe Singapore has arrived at “safe harbours” and will see further acceleration to its gross domestic product (GDP) in 1H24.

In a report, RHB Acting Group Chief Economist Barnas Gan said the services sector will underpin growth in 2024.

“The upside risks to [Singapore's] 1Q24 GDP growth will stem from Taylor Swift’s March concerts (March), which are estimated to add an estimated S$350 to S$500 million of tourism receipts, whilst additional tourism revenue can be expected from the recently concluded Bruno Mars concerts (April),” Gan said.

“Seasonal factors such as the Chinese New Year (February), Hari Raya Aidilfitri (April), Deepavali (October - November) and Christmas (December) will also likely add festive cheers and consumer spending to support Singapore’s retail space,” the expert added.

Gan warned that the downside of Singapore's GDP growth acceleration could stem from inflationary pressures.

“Evidence shows that global food and energy prices will see further upside bias in the quarters ahead, thus suggesting that January’s slowdown in Singapore’s import price momentum is, perhaps, temporal,” Gan said.

“We maintain the view that Singapore’s imported inflation will likely pick up in 2Q24 on the back of higher commodity prices in the months ahead,” Gan added.

Gan said inflation risk and a resilient economic backdrop will likely persuade the Monetary Authority of Singapore (MAS) to keep its policy parameters unchanged in 2024.

In April, MAS kept its policy unchanged, stating  that the S$NEER has “continued to strengthen in the upper half of the appreciating policy band.”