Mastercard Economics Institute Predicts Increased Discretionary Spending in Asia Pacific for 2024

The Mastercard Economics Institute (MEI) has unveiled its annual economic forecast, shedding light on the economic landscape that will shape the Asia Pacific region in the upcoming year. Titled “Economic Outlook: Balancing Prices & Priorities,” the report anticipates a scenario of moderate growth in the Asia Pacific, closely mirroring the levels observed in 2023. This projection stems from the ongoing stabilization of economies and the gradual return of key growth drivers, such as exports and tourism, to pre-pandemic norms.

While the macro outlook points to uniform growth, individual economies within the Asia Pacific region present a mixed bag of expectations. The MEI foresees Singapore as one of the economies poised for an acceleration in growth in 2024, projecting a 2.7% expansion in real terms, up from 0.9% in 2023. This growth surge is attributed to the stabilization of external trade. However, real consumer spending is expected to experience a slower pace, growing at 2.8% in 2024 compared to 3.5% in 2023. This deceleration is influenced by the escalating cost of living and inflationary pressures, impacting consumers’ purchasing power and confidence.

Shifts in Spending Patterns Anticipated

As the lingering economic effects of the pandemic diminish in 2024, consumers across the Asia Pacific region are expected to reallocate a larger portion of their spending toward discretionary categories, including travel and entertainment. In Singapore, however, this shift may be less pronounced, as consumers prioritize managing a higher cost of living and addressing debt. A noteworthy trend identified is Singaporean consumers’ increased allocation to essential spending, reflecting a more cautious financial approach from 2019 to 2023.

In a noteworthy shift, 2024 is anticipated to witness increased spending on goods compared to 2023 across the Asia Pacific. This marks a reversal of the 2022-2023 trend, where consumers favored ‘out-and-about’ services such as dining and travel as economies reopened post-pandemic. The rising demand for goods, encompassing electronics, household appliances, and clothing, is expected to revive the manufacturing sector in the region, aligning its performance more closely with the booming services sector in 2023. This shift signifies a new cycle in consumer preferences and economic dynamics as the Asia Pacific region navigates through the aftermath of the pandemic