MTI upgrades Singapore's 2025 GDP growth forecast to "1.5–2.5%", but flags risks ahead

The ministry's latest review points to better-than-expected growth in the first half of 2025, though the rest of the year is expected to be more challenging amid global uncertainties.

The Ministry of Trade and Industry (MTI) has revised Singapore’s 2025 GDP growth forecast upwards, from “0.0 to 2.0%” to “1.5 to 2.5%”. This follows stronger than expected economic performance in the first half of the year. However, the outlook remains uncertain, with risks tilted to the downside.

In the second quarter of 2025, the Singapore economy grew by 4.4% year-on-year, building on the 4.1% growth recorded in the first quarter. On a quarter-on-quarter seasonally adjusted basis, GDP rose by 1.4%, reversing the 0.5% contraction seen at the start of the year. This brought first-half GDP growth to 4.3% year-on-year.

Growth in the second quarter was largely driven by wholesale trade, manufacturing, finance & insurance, and transportation & storage. The wholesale trade and transportation & storage sectors were boosted by front-loading activities in the region ahead of new US tariff measures. However, the food & beverage services sector contracted, partly due to more locals travelling abroad.

MTI had kept its growth forecast at “0.0 to 2.0%” in May, citing potential headwinds from sweeping tariffs announced in April. Since then, the global picture has improved, which the ministry said was helped by the US’ 90-day pause on reciprocal tariffs, easing trade tensions, and new trade deals between the US and several partners including the Eurozone, Japan, South Korea, and Southeast Asian economies. Talks between the US and China have also continued, with signs that the tariff truce could be extended.

Even with these developments, growth among Singapore’s major trading partners is expected to slow in the second half of the year. The effects of front-loading are set to fade, while tariff measures begin to take hold. The US economy is projected to cool, with weaker consumer spending, while the Eurozone could face a drop in exports. In Asia, China’s growth is also expected to ease due to softer exports, though domestic consumption and investment are likely to hold up.

MTI warned that significant uncertainties remain, including the unpredictability of US trade policies, potential shocks to global financial markets, and geopolitical tensions that could disrupt energy supplies.

For Singapore, growth is expected to slow in the second half of 2025, with outward-oriented sectors set to face weaker demand. Manufacturing is projected to weaken as US tariff measures weigh on global end-markets, though transport engineering and precision engineering are likely to benefit from demand for aircraft maintenance and AI-related semiconductors.

Wholesale trade and transportation & storage are also expected to lose momentum as front-loading activities fade and global trade softens. Finance & insurance may see weaker credit demand and transaction volumes, although bullish market sentiment could support trading activity. Consumer-facing sectors, including retail and food & beverage services, are expected to remain subdued due to higher overseas spending by locals and a softer labour market.

Overall, citing stronger-than-expected performance in the first half of the year, MTI has raised Singapore’s 2025 GDP growth forecast to “1.5 to 2.5 per cent” from “0.0 to 2.0 per cent”, while noting that risks remain skewed to the downside. The ministry said it will closely track global and domestic economic developments, and adjust the growth forecast if needed over the year.

Lead image / Economic Survey of Singapore Second Quarter 2025