Singapore said on Friday its economy grew more than expected in the third quarter and raised its forecast for the year thanks to stronger demand from key trading partners.
The Commerce Department said it would see growth of “around 3.5%” in 2024, above the high end of the government’s previous estimate of 2.0% to 3.0%.
The Asian city-state’s economic performance is often viewed as a barometer of the global environment due to its heavy reliance on international trade.
The ministry said the economy grew 5.4% year-on-year in July and September, beating the preliminary estimate of 4.1% and economists’ forecasts of less than 4.0%.
The reading showed average growth for the first nine months of the year of 3.8%, prompting the ministry to raise its forecast for the full year.
The hike was the second this year after officials raised their forecast to 2.0-3.0% from 1.0-3.0% in August.
“Growth in the third quarter was mainly driven by the manufacturing, wholesale trade and finance and insurance sectors, supported in part by the upturn in the global electronics cycle,” the ministry said.
Manufacturing, a pillar of the economy, grew 11.0% year-on-year, reversing the 1.1% decline in the previous quarter.
The rush for anything related to artificial intelligence drove up demand for computer chips, a key export for Singapore.
“The electronics cluster grew strongly, supported by strong demand for semiconductor chips for smartphones and PCs, even as demand for semiconductor chips for automobiles and industrials remained weak,” the ministry said.
According to the ministry, key export markets such as the United States and the Eurozone, as well as some regional economies, performed better than expected in the third quarter.
However, the ministry forecast that growth in 2025 will be between 1.0% and 3.0%, reflecting increasing global economic uncertainties, including “uncertainty about the policies of the new US administration, with risks pointing to the downside tend”.