Nomura sees manufacturing supporting 3% GDP growth this year

Inflation to remain sticky this year.

Nomura still expects the Singapore economy to expand faster at around 3% this year from the 1.2% increase in 2023 on the back of robust manufacturing activity. 

In its Nomura Coincident Monthly Activity Indicator (NCMAI), its latest GDP growth forecast is at the upper end of the government’s official 1% to 3% projection for the year, and above the consensus estimate of 2.3%.

“We expect the strong rebound to be led by the global tech turnaround, which should boost overall manufacturing output,” it said, noting that the manufacturing sector’s growth already helped temper the weakness in the services sector.

It recently raised its 2024 GDP growth forecast from 2.8% previously as it no longer expects the US economy to slide into a recession this year.

READ MORE: Singapore’s economic upswing unlikely to last: experts

Nomura expects core inflation to remain elevated throughout the year before softening in the fourth quarter. A stick inflation environment may prompt the central bank to keep its FX policy stance steady with some easing possible towards the end of the year.

Ahead of the final data release on 15 February, it said the fourth quarter GDP growth will likely be revised down to 2.5% from the preliminary estimate of 2.8% currently, as the expansion of industrial production turned out lower than expected.