Singapore raises 2025 growth outlook, but warns of risks ahead

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 U.S. tariffs, and easing trade tensions. The government forecast gross domestic product to grow 1.5%-2.5% YoY, the Ministry of Trade and Industry said in a statement on Tuesday, higher than the 0%-2% forecast since May. “This largely reflects the better-than-expected performance of the Singapore economy in the first half of 2025,” the ministry said. “However, the economic outlook for the rest of the year remains clouded by uncertainty, with the risks tilted to the downside.” Strong quarter GDP expanded 4.4% in the second quarter, based on the ministry’s final estimate. 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 1.4% estimate. The trade-reliant nation side-stepped a technical recession in the second quarter with businesses accelerating shipments before the onset of U.S. President Donald Trump’s tariffs this month. The front-loading bolstered Singapore’s manufacturing, exports and services sectors. The government in April had 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 U.S. tariffs. Central bank holds steady The economy’s outperformance allowed the Monetary Authority of Singapore to stand pat at its July meeting, after back-to-back rounds of easing in January and April. The central bank said it will closely monitor developments and remain vigilant to risks to inflation and growth. Attention will now turn to the economic outlook for the second half of the year. Singapore’s manufacturing sector will likely grow at a slower clip as U.S. tariffs dampen demand in other markets, the ministry said. While Singapore faces just a 10% reciprocal tariff — lower than its peers in Southeast Asia — it still faces a sizable risk should Trump jack up sectoral levies on key exports to the U.S. like semiconductors or pharmaceuticals. Other countries may also reduce imports as their own sales to the U.S. suffer. “Looking ahead, the growth of Singapore’s major trading partners in the second half of the year is expected to moderate from that in the first half, as the boost from front-loading activities dissipates and the U.S.’ reciprocal tariffs take effect,” the ministry said. The central bank, which manages monetary policy by allowing the currency to move within a band, hasn’t announced the date of its next policy meeting. The Singapore dollar has risen more than 6% against the dollar this year, while the benchmark Straits Times Index has risen nearly 12%. By Claire Jiao

Sectors

Insights

Company

Singapore raises 2025 growth outlook, but warns of risks ahead