Singapore’s economy has achieved its fastest growth since 2021, with GDP expanding by 4.4% in 2024. This marks a strong rebound from the 1.8% recorded in 2023, driven largely by key industries such as wholesale trade, finance, and manufacturing. However, while these sectors flourished, retail trade and food & beverage struggled due to increased overseas spending by Singaporeans.

A strong finish to the year further solidified this economic momentum. The fourth quarter saw GDP rise by 5% year-on-year, surpassing economists’ forecasts of 4.7%, although it remained slightly below the 5.7% growth recorded in the third quarter. Analysts attribute much of this expansion to rising demand for electronics and finance-related services, both of which have played a pivotal role in Singapore’s recent economic performance.

Looking ahead, attention now shifts to the upcoming 2025 national budget, which Prime Minister Lawrence Wong is scheduled to unveil on February 18. With the latest data in hand, the government is expected to introduce policies aimed at sustaining economic growth and addressing areas of concern in the coming year.

Despite the strong recovery, Singapore faces uncertainties in 2025. The Ministry of Trade and Industry (MTI) has set a cautious economic growth forecast of 1% to 3%, reflecting concerns about global risks. Two key external factors influencing this outlook include potential shifts in U.S. trade policy if Donald Trump returns to the presidency, which could disrupt global trade, and China’s slowing economy, marked by declining merchandise exports and weakening industrial investment.

However, analysts remain cautiously optimistic. Chua Hak Bin, an economist at Maybank, projects that Singapore’s GDP could grow by 2.6% in 2025. He cites strong semiconductor demand, easing monetary conditions, and government spending as potential drivers of stability. Nevertheless, he also warns that possible tariff increases from the U.S. in the latter half of the year could pose economic challenges.

Certain industries are expected to play a significant role in keeping Singapore’s economy resilient. The electronics sector, a key part of the country’s manufacturing and trade-related services, continues to benefit from consistent demand for PCs, smartphones, and data center chips. Finance and insurance are also poised for further expansion, given the anticipated increase in capital market activity. Additionally, Singapore’s information and communications sector is set to grow as the country strengthens its position as a regional tech hub.

However, challenges persist for domestic consumer sectors, particularly retail and food & beverage, which continue to struggle due to heightened overseas spending by Singaporeans. A potential offset to this trend could come from an increase in international visitor arrivals, potentially giving the local hospitality and service industries a boost in 2025.

Ultimately, Singapore’s economic resilience in 2024 highlights its adaptability despite global economic headwinds. Yet, with external factors such as U.S. trade policies and China’s slower growth posing risks, careful policy decisions will be crucial in sustaining momentum. Policymakers will likely rely on a combination of monetary easing and strategic budget allocations to provide stability in the year ahead.

As global uncertainties persist, businesses and investors are watching closely to see how Singapore’s government steers the economy. The national budget announcement on February 18 will be a pivotal moment, setting the stage for economic direction in 2025.