RHB, UOB Expect Steady 2025 Growth Driven by Manufacturing

As we step into 2025, economists from RHB and UOB remain optimistic yet cautious about Singapore's economic prospects. Both banks have maintained their GDP growth forecasts, with RHB keeping its projection at 3.0% and UOB expecting growth to come in slightly lower at 2.5%. This places Singapore's projected growth at the upper end of the official projection range of 1%–3% and in line with or slightly above the growth rates of other major economies.

Singapore's manufacturing sector has shown remarkable resilience, rebounding with a 4.3% YoY growth in 2024 after contracting by 4.2% in 2023. UOB observed a robust 7.4% YoY increase in the fourth quarter of 2024, fueled by demand for semiconductor chips in the PC, smartphone, and data center markets. The wholesale trade sector followed suit, growing by 6.7% YoY during the same period. However, consumer-facing sectors like retail trade and food & beverage remained sluggish, as locals shifted their spending overseas despite a gradual recovery in tourist arrivals.

RHB forecasts that the Monetary Authority of Singapore (MAS) will keep its policy parameters unchanged, with core inflation stabilizing at 1.8% and headline inflation at 2.3%. The strong domestic wage growth and local employment rates are expected to cushion the impact of global trade uncertainties. On the fiscal front, RHB anticipates that the upcoming Budget 2025 will adopt an expansionary stance, with a projected deficit of 0.8% of GDP.

Looking ahead, both banks see the electronics, finance & insurance, and transport engineering sectors as key growth pillars for 2025. The global electronics cycle remains a significant tailwind, while Singapore's strategic role in the semiconductor supply chain positions it well for continued growth. However, the pace of growth may moderate in the latter half of the year, especially if geopolitical tensions escalate or global monetary conditions tighten unexpectedly.

In conclusion, Singapore's economic prospects for 2025 remain positive, driven by the resilience of its manufacturing sector and the support of key growth pillars. While geopolitical tensions and global monetary conditions may pose challenges, the country's strong fundamentals and proactive fiscal policies position it well to navigate these headwinds. Investors should keep a close eye on Singapore's economic performance and the progress of its key sectors throughout the year.