This photograph reveals the Marina Bay Sands lodges resort and Backyard by the Bay domes backdropped with town skyline in Singapore on June 27, 2025.
Roslan Rahman | Afp | Getty Photos
Singapore’s economic system grew at 1.4% within the second quarter of 2025, avoiding a technical recession because it reversed the 0.5% contraction recorded within the first three months of the yr.
On a year-over-year foundation, the nation’s economic system expanded 4.3% within the second quarter of 2025, accelerating from 4.1% within the first three months and beating expectations. A Reuters ballot of economists had forecasted a 3.5% progress.
A technical recession is usually outlined as two consecutive quarter-over-quarter declines in a rustic’s GDP. Analysts polled by Reuters had estimated a 0.6% quarter-over-quarter progress.
The GDP progress was led by the manufacturing sector, which expanded 5.5% yr over yr, up from 4.4% within the first quarter of 2025. The sector makes up about 17% of the nation’s economic system.
Tune Seng Wun, financial advisor at CGS Worldwide, attributed the reversal in GDP progress to the pause on “reciprocal tariffs” until Aug. 1, which have been introduced in the beginning of April.
Whereas companies have been dashing their orders within the first quarter to get forward of the “Liberation Day” tariffs, Tune advised CNBC, they may have chosen to front-load much more exports, “simply in case the tariff [pause] weren’t prolonged.”
Shivaan Tandon, markets economist at Capital Economics, made the same remark about Singapore benefiting from front-loading. Nonetheless, he expects this enhance to fade, and “Singapore’s export-oriented companies sector will drop again and manufacturing exercise will proceed to battle.”
Moreover the front-loading of exports, Singapore’s economic system additionally benefited from the de-escalation within the U.S.-China tariff struggle, falling rates of interest and a development increase, mentioned Chua Hak Bin, economist at Maybank Funding Banking Group
The development sector expanded 4.4% within the second quarter, a reversal from the 1.8% contraction within the first three months of the yr.
‘Uncertainty’ nonetheless forward
Regardless of the GDP beat, Singapore’s Ministry of Commerce and Trade mentioned in its launch that “there stays important uncertainty and draw back dangers within the world economic system within the second half of 2025 given the dearth of readability over the tariff insurance policies of the U.S.”
Again in April, MTI had downgraded the nation’s GDP progress to 0%-2% for 2025, down from its earlier forecast of 1%-3%. Singapore recorded a full-year GDP progress determine of 4.4% in 2024.
Not like different nations in Southeast Asia which have been hit with “tariff letters,” Singapore has not acquired such a “letter” from U.S. President Donald Trump.
Nonetheless, Singapore nonetheless faces the baseline 10% tariff from the U.S., regardless of operating a commerce deficit with the U.S. and having a free commerce settlement since 2004.
CGS’ Tune mentioned that Singapore’s newest GDP progress fee, together with different encouraging indicators within the economic system, prompt “some upside shock to the most recent MTI forecast of 0%-2%.”
Regardless of that, he cautioned that the commerce atmosphere stays very risky, and that the ministry is not going to be “in a rush” to revise their forecasts simply but.
“Any drag on world commerce because of tariffs and different boundaries, will negatively impression Singapore, [to what] extent we do not know. It is exhausting to calculate, as a result of it may be product by product sector or very nation particular.”
Capital Economics’s Tandon expects Singapore’s economic system to sluggish within the second half of the yr.
“With progress set to weaken and inflation prone to stay very low, we predict the case for additional financial loosening from the central financial institution stays firmly intact,” Tandon added.
Maybank’s Chua was extra optimistic, forecasting GDP progress of two.4% in 2025, above MTI estimates.
“There’ll possible be upgrades to market and official progress forecasts,” he mentioned, including that the financial institution expects some “modest slowdown in regional commerce actions, however not a contraction within the second half.”
The Singapore authorities introduced final week the rollout of grants to assist companies address the impression of worldwide commerce tensions.
The GDP launch additionally comes forward of a financial coverage choice by the nation’s central financial institution later in July.
In its Might assembly, the Financial Authority of Singapore loosened its coverage for a second straight time, saying that “there are draw back dangers to Singapore’s financial outlook stemming from episodes of monetary market volatility and a sharper-than-expected fall in ultimate demand overseas.”
The MAS additionally warned {that a} extra abrupt or persistent weakening in world commerce could have a big impression on Singapore’s trade-related sectors and, in flip, the broader economic system.
Nonetheless, the nation’s inflation numbers are supportive of a fee lower.
Singapore’s headline inflation fee fell to 0.8% in Might, its lowest stage since February 2021, whereas core inflation, which excludes lodging and personal transport, got here in at 0.6% in Might, in comparison with 0.7% the month earlier than.
