Singapore’s H2 recovery hinges on external factors: UOB

GDP is estimated to grow by 2.9% in 2024 and 3.2% in 2025.

Singapore’s economy could stage a meaningful recovery in the second half should the US Federal Reserve start its rate cut cycle, according to UOB.

In its latest global outlook report, UOB retained its growth forecast of 2.9% growth this year which will be followed by a stronger 3.2% expansion in 2025.

A robust H2 recovery will largely be dependent on the improvement of externally-oriented sectors. 

It said the growth of these industries will likely be hampered should interest rates in the US and EU remain elevated, while a rate cut from the Fed could help these sectors stage a more meaningful recovery.

China’s robust rebound is also expected to deliver positive spillover effects to its major trading partners in the region including Singapore. 

Domestically, UOB expects tourism-related industries to moderate in the coming months with the absence of one-off, major events. High costs could also dampen Singapore’s competitiveness as a tourism destination relative to its Southeast Asian peers.

UOB also expects the SGD to strengthen in H2 after staying one of the most resilient currencies in Asia against the greenback. 

It projected SGD to trade at 1.34 against USD in 3Q24 and 1.33 in 4Q24. The currency is forecasted to strengthen further to 1.32 in 1Q25 and 1.31 in 2Q25.