- Singapore’s GDP grew 4.1% yoy in 3Q24, driven by a strong rebound in manufacturing.
- The manufacturing sector expanded 7.5% yoy, reversing the 2Q24 contraction.
- Monetary policy remains unchanged as inflation risks are seen as balanced.
Singapore’s economy has delivered an impressive performance in the third quarter of 2024, with GDP growth surpassing expectations. The Ministry of Trade & Industry (MTI) announced today that Singapore’s GDP expanded by 4.1% year-on-year (yoy) in 3Q 2024, significantly stronger than the 2.9% growth in 2Q 2024. This robust showing was driven by a major rebound in manufacturing, solidifying Singapore’s economic recovery and positioning it for a strong finish to 2024.
The question now is: What does this mean for investors as we move into the final stretch of the year?
3 Key Takeaways for Investors
1. Manufacturing Sector Roars Back
After facing a 1.1% contraction in 2Q24, Singapore’s manufacturing sector surged 7.5% yoy in 3Q24. This was driven by growth across almost all clusters, except for the biomedical sector. Strong global demand continues to provide tailwinds, especially as the sector benefited from consistent expansion in the Purchasing Managers’ Index (PMI), which hit its highest level since July 2021.
2. Economic Resilience Amid Global Uncertainty
Singapore’s resilience stands out, especially given the global backdrop of manufacturing PMI contractions in the past three months. With steady momentum in the services and construction sectors, Singapore’s diversified economy continues to prove its strength.
3. Monetary Policy Remains Stable
Despite the upside surprise in GDP growth, the Monetary Authority of Singapore (MAS) has chosen to keep monetary policy settings unchanged. This indicates that while growth is solid, inflation risks are perceived as balanced, and there’s no immediate need for further tightening or easing.
What Can Investors Do?
- Focus on Manufacturing and Growth Sectors
The manufacturing sector’s resurgence presents opportunities for investors. Consider companies with strong exposure to manufacturing and export markets. Industrial stocks and companies in key manufacturing clusters could be set to benefit from sustained global demand.
- Watch for Stable Performers in Services
The services sector also posted a 3.6% yoy growth, showcasing its resilience. Investors might want to keep an eye on companies in wholesale trade, transportation, and finance that continue to perform steadily even amid broader uncertainties.
- Position for the Long-Term
With MAS keeping monetary policy steady, Singapore remains an attractive market for long-term investors. Look for opportunities in growth sectors like information & communications and finance, which continue to expand.
Key Risks to Watch Out For
- Global Manufacturing Slowdown
While Singapore’s manufacturing sector has shown remarkable strength, the global PMI has contracted for three consecutive months. If global demand weakens further, Singapore’s manufacturing sector could face headwinds.
- Inflationary Pressures and Labour Costs
MAS highlighted the risk of higher labour demand leading to increased unit labour costs. Investors should keep a close watch on inflationary trends and consider how they might affect corporate margins, especially in services.
Singapore’s economy continues to show strength
Singapore’s economy is showing strong momentum, and there are opportunities for investors to capitalize on this growth. However, it’s crucial to stay cautious, especially given the potential global risks. Make sure to diversify your portfolio, balancing exposure across growth sectors and defensive plays. As always, remember that investing is about the long-term picture, and managing risks is just as important as chasing returns.
Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.
