As the clock ticks towards 2025, Singapore's economy is poised for a growth forecast of 2.6%, a figure that remains unchanged from earlier predictions made in December 2024. This forecast, lying near the midpoint of the government's range between 1.0% and 3.0%, comes on the heels of a robust economy that grew by 4.4% in 2024. While there's optimism, the most probable outcome suggests a growth between 2.5% and 2.9%, reflecting a cautious outlook.
In terms of inflation, the estimated headline rate for 2025 is 1.7%, with core inflation slightly lower at 1.5%. This marks a decrease from earlier estimates, showcasing a trend of easing inflationary pressure. January 2025 saw core inflation drop to 0.8%, the lowest in over three years, indicating positive shifts in the economic landscape. Additionally, a thriving tourism sector has become a significant contributor to the overall economic health, attracting over 13 million visitors in 2023. Notably, the S$NEER policy band maintained by MAS reflects confidence in the currency's stability amid fluctuating external conditions.
However, the picture isn't entirely rosy. External factors, particularly geopolitical tensions and increasing tariffs, pose notable risks to growth. Additionally, a slowdown in China's economy could also weigh heavily on Singapore, as the nation's export market remains closely tied to its larger neighbor. On the flip side, a resurgence in global trade and manufacturing may provide some relief and boost Singapore's economy. The impact of cooling measures implemented by the government continues to influence long-term property market outcomes and stability.
Domestically, several drivers are supporting growth. Easing monetary conditions and a generous pre-election budget are stimulating the economy. There's been a surge in public construction activity, fueled by a strong fiscal position that allows for budget surpluses and a very low unemployment rate of just 2%.
Looking ahead, the Monetary Authority of Singapore is steering potential policy changes, with about 30% of participants anticipating a shift by July 2025. Meanwhile, sector performance remains varied, with services leading the charge and manufacturing sectors showing a steady growth forecast from 2024 to 2029. Combined with significant government initiatives in infrastructure and enterprise funding, Singapore's economic outlook blends excitement with caution, a balancing act as it approaches a new year.
