Singapore’s 2025 growth forecast upgraded
Singapore’s 2025 growth forecast upgraded
The Singapore economy’s growth rate accelerated to 4.3% YoY in 2Q2025, up from the upwardly revised 1Q2025 print of 4.1% YoY. Our 2025 GDP growth forecast has been upgraded from 1.6% YoY to 2.1% YoY, accounting for the better-than-expected 2Q2025 GDP print and the upward revision to 1Q2025 data.
Selina Ling
Chief Economist & Head,
Global Markets Research and Strategy,
OCBC
The Singapore economy’s growth rate accelerated to 4.3% YoY in 2Q2025, up from the upwardly revised 1Q2025 print of 4.1% YoY (previously 3.9% YoY).
No technical recession in 1H2025
In QoQ sa (seasonally adjusted) terms, the Singapore economy recovered from a -0.5% contraction in 1Q2025 to expand by 1.4% in 2Q2025, putting to rest concerns of a technical recession in 1H25.
Stellar 1H2025 GDP growth rate
The 2Q2025 advance estimates were above the Bloomberg market consensus forecast of 3.6% YoY (0.8% QoQ sa), but close to our forecast 4.1% YoY (1.2% QoQ sa). This brought 1H2025 GDP growth rate to a stellar 4.2% YoY, nearly double the 2.3% YoY for the same period last year. There was no change to the official 2025 GDP growth forecast of 0-2% YoY at this juncture. MTI noted that “looking forward, there remain significant uncertainty and downside risks in the global economy in the second half of 2025 given the lack of clarity over the tariff policies of the US”.
Manufacturing sectors benefits from front-loading
By sectors, manufacturing momentum improved from 4.3% YoY (-5.5% QoQ sa) to 5.5% YoY (0.1% QoQ sa) in 2Q2025, aided by broad-based expansions across most clusters except for chemicals and general manufacturing. This is the strongest YoY reading since 4Q24 and is likely attributable to the front-loading effects ahead of the reciprocal tariff implementation after the 90-day suspension period was announced.
Meanwhile, the services sector also improved from 3.7% YoY (0.6% QoQ sa) to 4.1% YoY (1.4% QoQ sa) over the same period - marking the sector’s best YoY performance since 4Q2024. 2Q2025 services momentum was led by wholesale & retail trade and transport & storage (4.8% YoY, mainly due to the water transport segment, demand for machinery, equipment & supplies wholesale trade, and motor vehicle retail trade), infocomms, finance & insurance and profession services (3.8% YoY, mainly due to sustained strong demand for IT and digital solutions, head offices & business representative offices, banking activities and auxiliary financial services), and accommodation & food services, real estate, administrative & support services and other services (3.4% YoY, largely supported by international visitor arrivals driving the accommodation growth). The construction sector was also resilient and maintained its strong clip at 4.9% YoY (4.4% QoQ sa), supported by a pickup in public sector construction.
We upgrade our 2025 GDP growth rate forecast
Our 2025 GDP growth forecast is upgraded from 1.6% YoY to 2.1% YoY, accounting for the better-than-expected 2Q2025 GDP print and the upward revision to 1Q2025 data. Given the healthy 4.2% YoY performance in 1H2025 and even with the tariff and geopolitical uncertainties could contribute to a sharp moderation in Singapore’s growth momentum in 2H2025, full-year growth should come in slightly above the 2% YoY level. For now, the 10% tariff for Singapore’s exports to the US looks like the baseline level, but it is important to monitor tariffs on sectors like semiconductors and pharmaceuticals which accounted for 41.4% and 6.6% respectively for industrial output and 11.2% and 7.9% of NODX in 2024.
External environment remains fluid
The external economic landscape remains very fluid given continued uncertainties about US tariffs. With Trump’s tax and spending bill being recently passed in the US congress, fiscal concerns continue to weigh on the longer-dated tenors of the US Treasury bond market. That said, the anticipated impact from China’s diversion of exports from the US end-markets to other markets could be disinflationary for the rest of the world.
Domestic demand well-supported
While the domestic labour market conditions are gradually cooling, domestic demand is well-supported amid ample local liquidity, as illustrated by the COE premiums and still resilient private property market. The official 2025 headline and core inflation forecasts remains at 0.5-1.5% YoY, while ours stand at 0.9% and 1.2% respectively. Fiscal relief is already forthcoming with the SG60 vouchers and the new Business Adaptation Grant. The Economic Resilience Taskforce could announce more measures in time to come as necessary. All this suggest that the Singapore economy is in a good place for 2025.
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