People relax next to a river at the Raffles Place financial district in Singapore on Dec 5, 2023. (PHOTO / AFP)

SINGAPORE - Singapore's economy grew 2.8 percent in the fourth quarter year-on-year, preliminary government data showed on Tuesday, faster than some economists expected and helped by improvements in construction and manufacturing.

The fourth quarter growth in gross domestic product was faster than the 1 percent expansion in the third quarter of 2023.

For the full year of 2023, Singapore's economy grew 1.2 percent, moderating from the 3.6 percent growth in 2022.

The key question is how much of a pickup in growth momentum we will have this year given the current uncertainties over whether the US will escape a recession, and if or when the Fed will cut rates, and how geopolitics will play out with US and other elections. 

Selena Ling, OCBC economist

Both OCBC economist Selena Ling and Maybank economist Chua Hak Bin said the year-on-year growth was better than they had anticipated in the fourth quarter. Ling was expecting a 1.8 percent expansion while Chua was looking at 2.5 percent.

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"Green shoots are sprouting in exports and manufacturing, brightening the outlook for 2024”, said Maybank's Chua, who expects GDP growth of 2.2 percent in 2024.

OCBC's Ling forecast range for 2024 is 1-3 percent, in line with the trade ministry's projection.

"The key question is how much of a pickup in growth momentum we will have this year given the current uncertainties over whether the US will escape a recession, and if or when the Fed will cut rates, and how geopolitics will play out with US and other elections”, she said.

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On a quarter-on-quarter seasonally adjusted basis, GDP expanded 1.7 percent in the October to December period, extending the 1.3 percent expansion in the third quarter.

Monetary policy is due for review no later than January 29, said the central bank on Tuesday. The Monetary Authority of Singapore had increased the frequency of reviews from twice a year to quarterly starting in 2024.

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In October, the MAS left policy settings unchanged as inflation in the city-state moderated.

Singapore's core inflation slowed to 3.2 percent in November last year from a peak of 5.5 percent in January and February.