Singapore's economy is poised for a more optimistic outlook in 2024 following a faster-than-expected growth spurt in the final quarter of 2023. Official figures reveal that the economy expanded by 2.8 per cent year on year from October to December, surpassing analysts' expectations of 1.8 per cent growth. For the entirety of 2023, the economy saw a 1.2 per cent growth, a slight slowdown from the previous year's 3.6 per cent expansion.

Despite the positive end to 2023, Singapore's government maintains a cautious stance, with Prime Minister Lee Hsien Loong reiterating a growth forecast of 1 per cent to 3 per cent for 2024, acknowledging the impact of external factors on the economy.

Economists, however, are cautiously optimistic about the year ahead. Maybank economist Chua Hak Bin projects a growth rate of 2.2 per cent for 2024, fueled by a stronger-than-expected recovery in the manufacturing sector. RHB acting group chief economist Barnabas Gan remains bullish, forecasting a 3 per cent growth, buoyed by positive sentiments in key industries such as electronics and manufacturing. OCBC chief economist Selena Ling maintains a more conservative estimate of 2 per cent growth for 2024, citing geopolitical uncertainties and potential challenges in the global economy.

Looking at sectoral performance, the manufacturing sector exhibited notable improvement, with a 3.2 per cent year-on-year growth in the fourth quarter of 2023 after experiencing contractions earlier in the year. The construction sector also saw an uptick, expanding by 9.1 per cent year on year, driven by increased activity. Within the services category, all sectors recorded expansions, with wholesale and retail trade, transportation and storage, and information and communications sectors leading the growth.

While the outlook for 2024 appears promising, economists caution that external factors such as geopolitical tensions and global economic uncertainties could pose challenges to Singapore's economic growth trajectory. The upcoming 2024 Budget announcement on February 16 is anticipated to shed further light on potential measures to support the economy, particularly amidst a flagged leadership transition year.