Singapore raises 2025 GDP growth forecast to 1.5–2.5pc
However, the economic outlook for the rest of the year remains clouded by uncertainty, with the risks tilted to the downside, the Trade and Industry Ministry (MTI) said.
'MTI will continue to monitor developments in the global and domestic economies closely, and make adjustments to the forecast if necessary over the course of the year,' the ministry said in a statement on the release of the Second Quarter 2025 Economic Survey of Singapore today.
The Singapore economy grew by 4.4 per cent on a year-on-year (y-o-y) basis in the 2Q 2025, extending the 4.1 per cent growth in the previous quarter. For 1H 2025, its GDP growth came in at 4.3 per cent y-o-y for 1H 2025.
GDP growth in 2Q 2025 was primarily driven by the wholesale trade, manufacturing, finance & insurance, and transportation & storage sectors. The wholesale trade and transportation & storage sectors were boosted by front-loading activities in the region ahead of the implementation of US tariff measures.
On a yearly growth basis, MTI said it had earlier maintained the 2025 GDP growth forecast at 0.0 to 2.0 per cent in May, given the potential impact of the sweeping tariffs announced in April on major economies.
However, since then, the performance of most advanced and regional economies has been more resilient than expected, as the US' 90-day pause on its reciprocal tariffs postponed the potential negative economic impact.
Front-loading activities during the tariff pause also provided a temporary boost to production and exports.
There has also been a de-escalation in trade tensions, with the US striking trade deals with several trading partners — including the eurozone, Japan, South Korea and several Southeast Asian economies — that led to a lowering of their reciprocal tariffs compared to what was announced earlier.
The US and China continue to be engaged in trade talks, with indications that the 90-day tariff truce between the two countries could be extended.
MTI said consequently, the 2025 GDP growth of key economies, including the US, the eurozone and China, is not expected to be as weak as previously projected.
'Looking ahead, the growth of Singapore's major trading partners in 2H 2025 is expected to moderate from 1H 2025, as the boost from frontloading activities dissipates and the US' reciprocal tariffs take effect,' it added.
However, significant uncertainties remain in the global economy due in part to the continued unpredictability of the US' trade policies, including the timing and extent of the sectoral tariffs on pharmaceutical products and semiconductors.
Singapore's economic growth is expected to slow in 2H 2025 versus 1H 2025 due to weaker performance in outward-oriented sectors. In particular, the pace of growth in the manufacturing sector is projected to weaken in the coming quarters as US tariff measures weigh on demand in global end-markets.
Nevertheless, there remain some bright spots within the sector. This includes the transport engineering cluster, given the sustained shift towards higher value-added aircraft maintenance, the repair & overhaul works in Singapore, as well as the precision engineering cluster, due to the continued ramp-up in capital investments by semiconductor manufacturers producing AI-related semiconductors. — Bernama
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