Take the American economy first. Several forecasters placed economic growth in the final quarter of last year at around 2.5% to 3%, which is well above the economy’s potential growth rate of around 1.8% to 2%. In the latest purchasing manager survey, the American services sector, which accounts for close to 80% of the total economy, was gaining strength at the end of 2024. With a strong pipeline of new orders, the sector’s strength is set to continue into 2025. Moreover, American companies continue to step up capital spending — core capital goods orders rose in November and have generally surprised to the upside last year. Thus, while the economy probably will not sustain such high growth rates of close to 3%, there is nothing in the data to suggest a sharp slowdown.
After ending the year on a surprisingly strong footing, Singapore moves into 2025 in better shape than we had expected only a few weeks ago. Although the overall global environment continues to look troubled, at least there has been some good news on the US economy and even on China in recent weeks. In addition, we now know that Singapore’s economy enjoyed strong momentum in the final months of 2024, providing a firm foundation for the coming year. Finally, Singapore and Malaysia have agreed to move ahead with the proposed Johor-Singapore Special Economic Zone (SEZ), which we see as a strong positive in both the short and long term.
The world economy: Resilience in the US and stabilisation in China
The US and China together account for about 40% of the world economy. So, improved prospects in those economies matter a lot to the overall outlook.
