Kuala lumpur: Singapore has upgraded its 2025 gross domestic product (GDP) growth forecast to between 1.5 to 2.5 per cent, reflecting a better-than-expected performance of the economy in the first half of 2025 (1H 2025). However, the economic outlook for the remainder of the year remains uncertain, with potential risks skewed to the downside, as reported by the Trade and Industry Ministry (MTI).
According to BERNAMA News Agency, the MTI stated that it would continue to closely monitor both global and domestic economic developments and adjust the forecast if necessary throughout the year. The Singapore economy experienced a 4.4 per cent year-on-year (y-o-y) growth in the second quarter of 2025, building on the 4.1 per cent growth in the previous quarter, resulting in a 4.3 per cent y-o-y growth for the first half of 2025.
The growth in the second quarter of 2025 was mainly driven by the wholesale trade, manufacturing, finance and insurance, and transportation and storage sectors. These sectors benefited from front-loading activities in anticipation of US tariff measures.
Previously, in May, MTI maintained the 2025 GDP growth forecast at 0.0 to 2.0 per cent due to potential impacts from sweeping tariffs announced in April. However, the resilience of most advanced and regional economies, coupled with a 90-day pause on US reciprocal tariffs, postponed potential adverse economic impacts. This pause also temporarily boosted production and exports.
Trade tensions have eased with the US reaching trade agreements with several partners, including the eurozone, Japan, South Korea, and several Southeast Asian economies, resulting in lower reciprocal tariffs than initially announced. Ongoing trade talks between the US and China indicate a possible extension of the 90-day tariff truce.
MTI anticipates that the 2025 GDP growth of key economies such as the US, the eurozone, and China, will not be as weak as previously projected. However, the growth of Singapore’s major trading partners is expected to moderate in the second half of 2025 as the boost from front-loading activities fades and US tariffs take effect.
Significant global economic uncertainties persist, partly due to the unpredictability of US trade policies, including sectoral tariffs on pharmaceuticals and semiconductors. Consequently, Singapore’s economic growth is expected to decelerate in the second half of 2025 compared to the first half due to weaker performances in outward-oriented sectors, particularly manufacturing.
Despite these challenges, there are promising areas within certain sectors, such as transport engineering, thanks to a shift towards higher value-added aircraft maintenance and repair in Singapore, and the precision engineering cluster, owing to increased capital investments by semiconductor manufacturers focusing on AI-related semiconductors.