CGS International
July 14, 2025
Singapore’s Surprising 2Q25 GDP Rebound: Outlook Cautious as Global Risks Loom
Robust 2Q25 GDP Growth Surpasses Expectations
Singapore’s economy delivered an unexpected upside in the second quarter of 2025, with advance GDP growth reaching 4.3% year-on-year, up from 4.1% in the first quarter and surpassing consensus estimates. This robust performance was underpinned by broad-based sectoral expansion, with manufacturing and services leading the charge.
- Manufacturing: Grew 5.5% year-on-year, up from 4.4% in 1Q25.
- Services: Expanded by 4.1%, compared to 3.7% previously.
- Wholesale & Retail Trade, Transportation & Storage: Posted a 4.8% gain, up from 4.6%.
- Quarter-on-quarter: Singapore’s economy rebounded 1.4% (seasonally adjusted), recovering from a 0.5% contraction in 1Q25 and beating consensus forecasts of 0.8% growth.
Sector-by-Sector Performance Breakdown
| Sector |
2Q25 (% yoy) |
1Q25 (% yoy) |
2Q25 (% qoq sa) |
1Q25 (% qoq sa) |
| Real GDP |
4.3 |
4.1 |
1.4 |
-0.5 |
| Manufacturing |
5.5 |
4.4 |
0.1 |
-5.5 |
| Construction |
4.9 |
5.1 |
4.4 |
-1.8 |
| Services Producing Industries |
4.1 |
3.7 |
1.4 |
0.6 |
| Wholesale & Retail Trade, Transportation & Storage |
4.8 |
4.6 |
2.7 |
0.8 |
| Info & Communications, Finance & Insurance, Professional Services |
3.8 |
3.7 |
1.3 |
-4.4 |
| Accommodation & Food Services, Real Estate, Admin & Support, Other |
3.4 |
2.3 |
0.7 |
1.2 |
Manufacturing Sector: A Short-Lived Rebound?
While the manufacturing sector returned to positive territory in 2Q25, the sustainability of this recovery is in question. The rebound was largely attributed to front-loading activities, rather than a fundamental upturn. Electronics, a major driver, is already showing signs of deceleration:
- Electronics output grew just 3.9% year-on-year in May 2025, a sharp slowdown from the 14.6% surge in April.
- Industrial output dipped in May, weighed by softer momentum in the electronics cluster.
Given Singapore’s high trade exposure, the economy remains vulnerable to global disruptions. Although the US imposed a relatively modest 10% tariff on Singapore (lower than for other ASEAN nations), the city-state’s open economy remains sensitive to prolonged global trade weakness. Policymakers have already flagged the potential for a technical recession following the 1Q25 contraction.
Services and Construction: Broad-Based Gains
Services industries saw sustained expansion, with particular strength in wholesale and retail trade, transportation, and storage. The information & communications, finance & insurance, and professional services clusters reversed a previous quarter’s decline, posting a 1.3% increase after a 4.4% drop.
The construction sector also staged a comeback, recording a 4.4% quarterly gain after contracting 1.8% in 1Q25.
Trade and Export Performance: Cautious Optimism Amid Slowdown
Singapore’s export performance has held up relatively well year-to-date, but cracks are emerging:
- Non-oil domestic exports (NODX) ticked down in May 2025, especially in non-electronics shipments.
- Export momentum is expected to slow further in the second half as global demand remains subdued.
Uncertainty lingers around potential US tariffs on semiconductors and pharmaceuticals, which could weigh on externally oriented sectors.
Macroeconomic Forecasts: GDP, Inflation, and Employment Outlook
Despite a strong first half, Singapore’s growth momentum is expected to moderate. The full-year GDP growth forecast is maintained at 1.6% for 2025, within the Ministry of Trade and Industry’s official projection range of 0% to 2%. Downside risks dominate due to fragile external conditions.
| Year |
Real GDP (% yoy) |
Headline Inflation (avg, % yoy) |
Unemployment Rate (end, %) |
Fiscal Balance (% GDP) |
Current Account (% GDP) |
International Reserves (US\$ bn) |
| 2023 |
2.2 |
4.8 |
1.8 |
-0.5 |
17.7 |
347.6 |
| 2024 |
4.4 |
2.4 |
1.7 |
0.9 |
17.5 |
371.4 |
| 2025F |
1.6 |
1.0 |
2.0 |
0.9 |
16.4 |
380.0 |
| 2026F |
2.5 |
1.7 |
2.1 |
0.2 |
14.2 |
390.0 |
Key takeaways:
- Headline inflation is expected to average 1.0% in 2025, down from 2.4% in 2024.
- Unemployment is projected to edge up slightly to 2.0% by end-2025.
- Fiscal balance remains in slight surplus, and the current account surplus narrows modestly but remains strong.
Monetary Policy: Dovish Stance Expected
The Monetary Authority of Singapore is anticipated to maintain a dovish policy stance in the upcoming review, with expectations of a further reduction in the S\$NEER slope while keeping the width and centre unchanged. This comes amid the likelihood of further softening in regional export demand.
Key Risks and Forward Guidance
Looking ahead, Singapore faces several headwinds:
- Front-loading Activity: The recent boost from front-loading is expected to dissipate, removing a key near-term tailwind.
- US Tariffs: Unresolved risks around new US sector-specific tariffs could dampen trade, particularly for semiconductors and pharmaceuticals.
- External Fragility: The external environment remains fragile, with global demand uncertainties dominating the risk landscape.
Despite a solid start to 2025, Singapore’s GDP growth momentum is projected to stay subdued in the second half of the year.
Conclusion: Growth Momentum Faces Testing Times
Singapore’s economy delivered a surprisingly strong second quarter, with broad-based gains across all major sectors. However, with key growth drivers losing steam and trade headwinds intensifying, the outlook for the remainder of 2025 is increasingly cautious. Policymakers and market participants should brace for a period of subdued growth as the global environment remains uncertain.
Economists:
Mohamed Afham Zulghafir
Nazmi Idrus
CGS International
This article provides a comprehensive analysis based on the latest economic data and official projections as of July 14, 2025.
