(Bloomberg) — Singapore’s economy grew faster than expected in 2023 helped by late gains in manufacturing and construction, even as risks loom in the form of a difficult global economic environment and the evolving geopolitical situation.
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Gross domestic product grew 1.2% during the year, according to advance estimates Tuesday from the Ministry of Trade and Industry. That’s better than the government’s projection for an annual expansion of around 1%.
The stronger-than-expected performance followed a 1.7% GDP expansion in the three months through December from the prior quarter. On a year-on-year basis, the economy expanded 2.8% last quarter.
As one of the first countries to publish the full-year GDP numbers in Asia, Singapore’s performance holds out hope for recovery in the the rest of the region. Exports returned to growth in November, snapping 13 months of decline, and factory output increased in the final months of the year. Still, Prime Minister Lee Hsien Loong on Sunday tempered any optimism as he flagged risks from an uncertain external environment.
“For some years to come, we must expect the external environment to be less favorable to our security and prosperity,” Lee said in his New Year’s message. “Geopolitical uncertainties will continue weighing on the global economy.”
AP Moller-Maersk A/S, the world’s No. 2 container line, suspended transit through the Red Sea after an attack on one of its ships by Houthi rebels led to a significant escalation of tensions in the vital waterway. Elsewhere, China’s factory activity contracted to the lowest level in six months in December, as the post-pandemic recovery of the world’s no. 2 economy has been hampered by a lingering real estate crisis.
To put Singapore’s full-year number in perspective, the 1.2% pace of expansion was the weakest since the city-state emerged from the pandemic-induced slump in 2020. Private home prices climbed 2.7% in the fourth quarter, taking 2023’s increase to 6.7%, according to preliminary estimates from the Urban Redevelopment Authority. That’s slower than the 8.6% rise in 2022.
The government’s outlook for 2024 remains unchanged for now, as Lee on Sunday reiterated the ministry’s earlier forecast that the economy will expand in a range of 1%-3%.
That outlook depends on a durable recovery in global trade, given that exports are equivalent to more than one-and-a-half times the size of the island’s economy. The gains in exports in November were largely on account of a low year-ago base.
–With assistance from Tomoko Sato.
(Updates with context from the fourth paragraph.)
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