While the economy has recovered to pre-pandemic levels, it is facing major headwinds in the form of high inflation, elevated interest rates, and low global demand

Multiple headwinds will prevent the economy from growing substantially through H1 2024

Firms should optimize their sales and marketing efforts to capitalize on a likely rebound in domestic and foreign demand in H2 2024. Meanwhile, through H1 2024, they should prepare for demand conditions to remain challenging and account for heightened price sensitivity among low- and middle-income customers. Firms should consider unbundling product offerings where possible for these customers to provide more flexibility during a tight cost environment. Additionally, they should prioritize sales to the premium segment, which has been largely unaffected by recent headwinds.

Given Singapore’s high exposure to the external environment, executives should also allow for downside risks in the short term. Executives should account for a medium-likelihood risk of a sharper deterioration in demand from the US and Europe and an even weaker recovery in demand from China, which along with prolonged high inflation, would lead to a technical recession starting from Q1 2024.


  • On a real seasonally adjusted basis, total retail sales contracted by an average of 6.6% YOY in Q2 2023. Demand remained weak in July as well, with total sales contracting by 6.6% YOY. Spending on most items, such as autos, household equipment, cosmetics, and recreational goods, continued to fall amid acute cost pressures on households. However, spending on food, alcohol, and clothing remained strong, supported by a tourism recovery.
  • Domestic goods exports, a key growth driver for Singapore’s economy, contracted sharply by an average of 19.4% YOY in Q2 2023. Notably, exports in key sectors such as petroleum and electronics fell by 30.8% YOY and 27.5% YOY, respectively, amid a major slowdown in global demand. Exports weakened at an even sharper pace in July and August, falling by 27.6% YOY and 22.0% YOY, respectively.
  • Investments contracted by 3.2% YOY in Q2 2023. Private investment fell by a substantial 4.6% YOY, driven by a decline in activity across all key sectors (construction, transport, and machinery) amid weak demand and elevated costs. However, public investment returned to expansionary territory, rising by 4.4% YOY.

Our View

Singapore’s economy is facing multiple challenges that are weighing heavily on growth, and we expect this weakness to persist over the next nine months. Demand from key global markets (i.e., the US, Europe, and China) will remain muted through H1 2024, weighing on export-oriented manufacturing activity across key sectors. Meanwhile, elevated inflation (which will be under renewed pressure from the constrained supply of key imported commodities such as rice), high interest rates, and tax hikes will keep consumption and investment activity subdued. However, firms should note that the economy will see a few tailwinds in the near term. Spending on non-durable goods such as food and alcohol, as well as services, will be strong, driven by a tourism recovery that is picking up pace with Chinese tourists returning in larger numbers. Additionally, in the long term, foreign investment in key sectors such as semiconductors will rise as MNCs continue to expand their manufacturing footprint amid global geopolitical tensions and supply chain risks.

Following a challenging growth environment through H1 2024, Singapore’s economy will likely see a gradual rebound in H2 2024. Global demand will begin to recover noticeably in the second half of the year. Moreover, inflation and credit costs will ease considerably compared to current levels. Due to an improvement in macroeconomic conditions in H2 2024 and base effects, we expect GDP growth to accelerate from 1.1% YOY in 2023 to 2.8% YOY in 2024.

At FrontierView, our mission is to help our clients grow and win in their most important markets. We are excited to share that FiscalNote, a leading technology provider of global policy and market intelligence has acquired FrontierView. We will continue to cover issues and topics driving growth in your business, while fully leveraging FiscalNote’s portfolio within the global risk, ESG, and geopolitical advisory product suite.

Subscribe to our weekly newsletter The Lens published by our Global Economics and Scenarios team which highlights high-impact developments and trends for business professionals. For full access to our offerings, start your free trial today and download our complimentary mobile app, available on iOS and Android.