Singapore’s Economy Rallies in Q4 2023: Key Insights for Investors

January 4, 2024

Singapore’s economy witnessed a notable upswing in the fourth quarter of 2023, marking a promising shift for investors. According to the Ministry of Trade and Industry (MTI), the economy expanded by 2.8% year-over-year (y-o-y) in Q4, a significant leap from the 1.0% growth seen in Q3. This uptick is part of a consistent quarter-over-quarter (q-o-q) growth pattern, with Q4 registering a 1.7% increase following Q3’s 1.3% growth.

For the entire year of 2023, Singapore’s economy grew by 1.2%, aligning closely with forecasts made by the Monetary Authority of Singapore (MAS). Prime Minister Lee Hsien Loong, in his 2024 New Year message, highlighted these figures and projected a 1% to 3% GDP growth for the upcoming year. He also mentioned the likelihood of decreasing inflation, though this remains contingent on global economic conditions.

Sector-wise Breakdown: A Closer Look for Investors

  1. Manufacturing Sector: This sector showed a remarkable turnaround, growing by 3.2% y-o-y in Q4, a recovery from a 4.7% contraction in the previous quarter. This growth spanned across various clusters, except for precision engineering.
  2. Construction Sector: Demonstrating robust growth, the construction sector surged by 9.1% y-o-y in Q4, surpassing the 6.2% growth in Q3. Both public and private construction outputs contributed to this expansion.
  3. Services Sector: The combined growth of the wholesale & retail trade and transportation & storage sectors was 1.5% y-o-y in Q4. Notably, the air transport segment, buoyed by rising passenger numbers at Changi Airport, significantly contributed to this growth. Additionally, the group of sectors including information & communications, finance & insurance, and professional services grew by 3.9% y-o-y, indicating healthy expansions across the board.
  4. Other Services Sectors: These sectors, encompassing accommodation & food services, real estate, administrative & support services, and others, grew by 2.0% y-o-y, though this was a slight slowdown from the 3.9% growth in Q3.

Implications for Investors

The overall economic growth in Singapore, especially in key sectors like manufacturing, construction, and services, offers a favourable climate for retail investors. With the forecasted steady growth and potential decrease in inflation, investment opportunities in various sectors appear promising.

However, investors should be mindful of the evolving global economic landscape, which could impact Singapore’s economy and, consequently, investment returns. Diversifying investments across different sectors and staying informed about ongoing economic trends are prudent strategies in this dynamic environment.

Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.

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Billy Toh

Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.

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