Singapore’s economy demonstrated resilience in the second quarter of 2025, expanding by 4.4% year-on-year, surpassing the initial advance estimate of 4.3%. This performance contributed to a first-half GDP growth of 4.3% year-on-year. On a quarter-on-quarter seasonally adjusted basis, GDP rose by 1.4%, rebounding from a 0.5% contraction in the first quarter. In response to this stronger-than-expected first half, the Ministry of Trade and Industry (MTI) upgraded its full-year 2025 GDP growth forecast to 1.5%-2.5%, from the previous range of 0.0%-2.0%. This adjustment reflects optimism tempered by uncertainties in the global economic outlook, with risks tilted downward.
The Monetary Authority of Singapore (MAS) affirmed that its current monetary policy stance remains appropriate, considering factors influencing domestic growth and inflation. MAS Chief Economist Edward Robinson emphasized a gradualist approach amid uncertainties, with policy reviews conducted quarterly. Bank of America economists viewed the lower end of the forecast (1.5%) as improbable, potentially implying a sharp recession in the second half, while the 2%-2.5% range appears more likely, with upside potential to their own 1.8% projection. Enterprise Singapore maintained its 2025 non-oil export growth forecast at 1%-3%, anticipating weakness in the latter half after a robust start, partly due to tapering front loading activities and resuming reciprocal tariffs from August 7, 2025.
Global trade tensions, particularly U.S. tariffs under President Donald Trump, continue to pose challenges for Singapore, a trade-dependent hub where exports exceed three times its GDP. Despite a free-trade agreement and trade deficit with the U.S., Singapore faces a baseline 10% tariff, alongside steeper levies on semiconductors (up to 100%) and pharmaceuticals (rising to 150%-250%). Pharmaceuticals comprised 12.3% of Singapore’s 2024 exports to the U.S., with electronics and semiconductor equipment at 16.6%. Higher tariffs on Southeast Asian imports (19%-40%) could indirectly impact Singapore’s shipping role, constricting global trade flows and weighing on economic activity.
(Sources: Reuters)
