Tight financial conditions to weigh on GDP growth this year: UOB

Rate cuts could stimulate investment and boost consumption overseas.

Tight financial conditions globally will continue to weigh on Singapore’s externally oriented sectors for the remainder of the year, according to experts.

UOB said that sectors such as manufacturing, wholesale trade, transportation and storage could only stage a more meaningful recovery in the fourth quarter once major central banks start bringing down borrowing costs. 

It said interest rate reduction would ease the current tight financial conditions globally, stimulate investment and boost consumption overseas, a trend that would benefit Singapore’s externally oriented industries.

Back home, the outlook for tourism-related sectors like accommodation, F&B and retail remains dim as tailwinds from the pent-up demand for these services continue to ease years following the pandemic.

UOB has maintained its 2024 GDP forecast for Singapore at 2.9%, at the higher end of the official forecast range of 1% to 3%. UOB projects economic growth will pick up by 3.2% next year.