**Singapore**: Deputy Prime Minister Gan Kim Yong projects a slowdown in the city’s economic growth, forecasting a 1-3% expansion for 2024 while remaining optimistic about Southeast Asia’s potential as a major economic force. Key strategies include innovation, regional collaboration, and addressing domestic constraints.
In a recent address concerning Singapore’s economic outlook, Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong indicated that the city-state’s growth will likely decelerate amid escalating global trade frictions and competition for strategic investments among major economies. Speaking on March 6 during the debate over the Ministry of Trade and Industry’s 2025 budget, DPM Gan projected that Singapore’s economy would expand by 1 per cent to 3 per cent in 2024, a reduction from the faster pace of 4.4 per cent recorded in the previous year.
Despite this slowdown, DPM Gan expressed optimism about the broader Asian economy, asserting that Southeast Asia is on track to become the fourth largest economy in the world by 2030. He highlighted the potential for artificial intelligence (AI), digitalisation, and the transition to a low-carbon economy to unlock new growth opportunities within the region.
The anticipated reconfiguration of global trade flows, driven by intensifying trade tensions, particularly between the United States and its major trading partners, represents both challenges and opportunities for Singapore. “Singapore can capitalise on the shifts in production and supply chains to attract new investments, and strengthen its position as a key node in the reconfigured trade flows,” DPM Gan noted.
To bolster long-term growth, Singapore will implement a comprehensive four-pronged strategy. This includes strengthening the country’s connectivity, fostering innovation in strong enterprises, creating a pro-enterprise environment, and investing in human capital. DPM Gan elaborated on initiatives geared towards enhancing Singapore’s ecosystem of innovation-driven businesses, such as a commitment of $500 million from Budget 2025 to establish a new national semiconductor R&D fabrication facility in Tampines.
Additional strategies to support enterprise growth were unveiled, including the creation of a Long Term Investment Fund, which is set to deploy over $200 million towards enterprises with longer growth trajectories. A separate $1 billion Private Credit Growth Fund aimed at local businesses exhibiting strong growth potential was also announced, reflecting the government’s effort to nurture industry leaders.
Collaboration with regional partners was emphasised as a vital component of Singapore’s economic strategy. Earlier this year, Singapore and Malaysia signed an agreement on the Johor-Singapore Special Economic Zone (JSSEZ), which DPM Gan stated would allow firms to leverage resources across borders to expand their operations. Singapore also intends to deepen cooperation with Indonesia and improve market access for its businesses across ASEAN.
As regional economic integration progresses, the negotiations on the Asean Digital Economy Framework Agreement are expected to be significantly concluded this year, further accelerating digital growth. The upgrading of the Asean Trade in Goods Agreement is also anticipated to enhance intra-Asean trade and supply chain connectivity.
However, the backdrop of rising trade frictions remains a significant concern. The ongoing trade war, marked by protectionist measures implemented under former President Donald Trump, has already had considerable impacts on global trade dynamics. DPM Gan cautioned that retaliatory tariffs could lead to a tit-for-tat cycle, potentially disrupting supply chains, slowing global trade, and increasing business costs. He remarked, “This could upend the global rules-based economic order that Singapore, as a small and open country, is dependent on.”
In addition to immediate challenges related to trade, Singapore faces longer-term domestic constraints, such as land and labour shortages, necessitating innovative solutions to optimise space and enhance productivity. DPM Gan acknowledged the need to reduce the nation’s carbon footprint amid growing energy demands whilst also focusing on building a competitive workforce to navigate the uncertain economic landscape ahead.
As Singapore braces for potential economic uncertainties, DPM Gan reiterated the importance of maintaining a competitive edge through innovation and strong regional integration, underscoring that these measures will be essential for sustaining the nation’s economic viability in an increasingly complex global context.
Source: Noah Wire Services
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