Analysts at CGS International (CGSI) are projecting that Singapore’s listed companies post core net profit growth of 5.6% and 6.8% respectively for 2024 and 2025, lifted by the financials, capital goods, telecommunications, consumer and internet services sectors.
On a q-o-q basis, the analysts have raised their 2024 and 2025 core net profit forecasts by 1.6% and 2.4% respectively, with banks expected to grow by 3.9% and 5.4% over each period respectively.
CGSI’s analysts cite “sturdier” net interest margins (NIM) in 2025 due to fewer than expected rate cuts.
Similarly, they project the internet service sector to grow by 9.7% and 13.9% q-o-q in 2024 and 2025 respectively on stronger gross merchandise value (GMV) and earnings before interest, taxes, depreciation and amortisation (ebitda) performance.
However, this upward momentum will be moderated by lower estimates of 23.8% and 19.5% in 2024 and 2025 respectively for the gaming sector, as well as for commodities at reduced projections of 8.6% and 9.7%.
“We now expect Singapore’s 2025 GDP growth to soften slightly to 2.4% y-o-y, compared to 3.0% in 2024. This aligns with the Ministry of Trade and Industry’s (MTI) forecast range of 1% to 3%. We expect that, similar to what happened in 2024, the manufacturing sector will continue playing a crucial role in supporting Singapore’s economic growth, with expansion from the electronics industry,” write the analysts.
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US, China trade
Meanwhile, they add that GDP growth among Singapore’s key trading partners, particularly the US, looks likely to slow in 2025. China is also not immune to this deceleration in GDP growth, which the analysts note reflects domestic issues and weaker export performance.
The analysts also note several macro downside risks ahead. Firstly, the continuation of geopolitical tensions in the Middle East and Europe amid the lack of a resolution could disrupt supply chains, leading to elevated import prices.
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Secondly, there is uncertainty over the policies of the incoming Trump administration especially with respect to his tariff policies, say the analysts.
On the end of non-oil domestic exports (NODX), growth is projected at 3.7% y-o-y in 2025, an improvement from 1.5% in 2024.
“NODX and factory output readings for the past three months indicate that growth momentum in the electronics sector remains stable, with 9MFY2024 growth at 6.1% y-o-y, indicating a strong likelihood of a continuing upward trajectory in 2025F on the back of the ongoing upturn in the electronics trade cycle.”
The analysts note that the projected improvement in NODX growth is partly attributable to a low base effect from 2024, hence providing a favourable comparison for 2025.
They also anticipate some downside risks stemming from Trump's tariff policies, which will be more noticeable in the second half of 2025. “Looking back to 2018, during Trump's initial implementation of tariffs in his previous presidency, NODX experienced some fluctuations but achieved positive year-on-year growth on average. We also expect 1QFY2025 to see some tailwinds as companies frontload their purchases in anticipation of the tariffs.”
As a result, the analysts anticipate headline inflation to decline further to 2.0% y-o-y in 2025, down from 2.4% in 2024.
COE to ease further
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One significant contributor to persistent inflationary pressures throughout the first three quarters of 2024 has been car ownership costs, driven by the escalation of Certificate of Entitlement (COE) prices, although COE prices are expected to ease further, as evidenced by recent trends.
They also see the global oil supply to benefit from the anticipated unwinding of production cuts by the Organisation of the Petroleum Exporting Countries Plus (OPEC+) slated to begin at the end of this year, likely easing price pressures in the energy market and subsequently providing relief to inflationary pressures globally.
“With falling inflation and rising risk of weaker exports ahead, we expect MAS to adjust its monetary policy during its upcoming Monetary Policy Committee (MPC) meeting in January 2025. Such an adjustment could involve the easing of the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) slope while leaving the centre and width of the policy band unchanged,” conclude the team at CGSI.
