Singapore raises 2025 growth outlook, warns of risks ahead

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4 days ago

By Claire Jiao
(Bloomberg) – Singapore raised its growth forecast for this year after a better-than-expected performance in the first half, mainly on the back of front-loading ahead of US tariffs and easing trade tensions.
The government sees the economy expanding 1.5%-2.5% year-on-year, the Ministry of Trade and Industry said in a statement on Tuesday, higher than the 0%-2% outlook since May.
'Singapore's economic outlook for the rest of the year remains clouded by uncertainty,' the ministry's permanent secretary Beh Swan Gin told reporters, adding that it's premature to speculate whether there will be a technical recession this year.
The Singapore dollar is up 0.1% versus the greenback at 1.2865, as the local currency saw little reaction to the upwards revision of the growth forecast.
Singapore's GDP expanded 4.4% in the second quarter. That compares with the government's 4.3% advance estimate and the median forecast of 4.4% in a Bloomberg survey of economists.
On a seasonally adjusted basis, the economy grew 1.4% from the first three months of the year, in line with the advance estimate. That allowed the trade-reliant nation to side-step a technical recession in the second quarter with businesses accelerating shipments before the onset of US President Donald Trump's tariffs this month. The front-loading bolstered Singapore's manufacturing, exports and services sectors.
Singapore in April downgraded its forecast for 2025 GDP growth by a full percentage point from the initial estimate of 1%-3%, in light of the potential impact of higher US tariffs.
The economy's initial outperformance allowed the Monetary Authority of Singapore to stand pat at its July meeting, after easing in January and April. The central bank said its monetary policy remains appropriate and it's well placed to respond to risks.
Attention will now turn to the economic outlook for the rest of the year. While Singapore faces just a 10% reciprocal tariff – lower than its peers in Southeast Asia – it still faces a sizeable risk should Trump jack up sectoral levies on key exports to the US like semiconductors or pharmaceuticals. Other countries may also reduce imports as their own sales to the US suffer.
Singapore's economic growth is expected to cool in the second half of the year compared to the first half, the ministry said. The manufacturing sector will likely grow at a slower clip as US tariffs dampen demand in other markets, the ministry said. Wholesale trade could also be hit as front-loading wanes, while weaker appetite for shipping and air cargo could hit the transport and storage sectors.
The ministry said it '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 MAS, which manages monetary policy by allowing the currency to move within a band, is scheduled to announce its next decision by Oct. 14. The Singapore dollar has risen more than 6% against the dollar this year, while the benchmark Straits Times Index has risen nearly 12%.
(Updates with market moves, details from briefing)
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