Maybank economists Chua Hak Bin and Brian Lee Shun Rong have upgraded their 2025 Singapore GDP growth forecast to 3.2% from 2.4%, and for 2026, from 1.8% to 2%, following 2Q advanced estimates, which came in higher than expected.
Their optimism comes on the backs of reduced trade fears and domestic tailwinds.
They expect the government to similarly upgrade its estimates. “We expect the Ministry of Trade and Industry (MTI) to upgrade its GDP forecast range for 2025 to between 2% and 3% from the current 0% to 2% range, when final 2Q2025 GDP is released in August,” write Chua and Lee in their July 14 note.
While the reciprocal tariffs to be imposed by the US on Singapore could be raised from the current 10% to between 15% and 20%, tariffs on Singapore-made goods remain “relatively competitive “compared to the above 20% rates for other trading partners in the region.
With this, Chua and Lee estimate the effective US tariff rate at about 5.1% for Singapore, given the current exemptions and sector tariffs.
Exports of electronics and pharmaceuticals, they note, should continue to grow after August so long as the exemptions remain in place.
See also: Singapore's economy expands by 4.3% in 2Q, extending growth thus far this year
Alongside this, broadening global AI demand continues to drive semiconductors and other electronics exports.
The Semiconductor Industry Association (SEMI) has projected global chip sales to grow by a robust 11.2% for the full year.
To be sure, Chua and Lee’s 2026 GDP projection of 2% takes into account the fading of the first half’s frontloading boost to manufacturing and trade-related services sectors.
See also: New grant for local firms to seek advice, subsidies as Trump’s tariffs bite
Furthermore, after US President Donald Trump’s Aug 1 tariff deadline, the economists add that manufacturing growth could also slow should higher reciprocal tariffs for the region kick in.
Construction activity, they note, will likely remain strong with the commencement of the Changi Terminal 5 project in addition to the Marina Bay Sands’ US$8 billion ($10.2 billion) expansion and the development of public and private housing.
On monetary conditions, Chua and Lee expect a continued easing due to safe haven inflows, with the three-month Singapore overnight rate average (SORA) declining to 1.95% as at July 14.
“Falling financing rates will help support financial activities and property demand. In addition, the government is likely to roll out more fiscal support in the third quarter with a potential SG60 package to support jobseekers and firms affected by the trade war,” write the analysts.
Singapore will also launch a new Business Adaptation Grant capped at $100,000 per firm by October, supporting manufacturers and exporters with overseas expansion and supply chain reconfiguration costs.
With this, Chua and Lee see that Singapore is in a “strong position” to “rev up” fiscal spending given its $14.3 billion accumulated surplus for the FY2021 to FY2025 five year term.
“Given the improved economic outlook, we expect the Monetary Authority of Singapore (MAS) to maintain the current modest appreciation bias at both the July and October meetings,” add the analysts.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
In the prior two meetings in January and April, MAS had eased policy, lowering the slope of its Singapore dollar nominal effective exchange rate ($SNEER) policy band.
With this, Chua and Lee forecast the three-month SORA rate to fall to 1.7% by the end of 2025 on safe-haven flows and US Federal Reserve (US Fed) rate cuts in the second half of the year.
Surge in 2Q2024
In the second quarter, Singapore avoided a technical recession thanks to its GDP accelerating 4.3% y-o-y.
The growth, Chua and Lee note, partly stems from the frontloading boost during the 90-day tariff pause and de-escalation in the US-China tariff situation, while a “boom” in construction and falling interest rates have also helped cushion Trump’s tariffs.
Since the start of the year, the three-month SORA rate has fallen by around 110 basis points (bps) on safe-haven capital inflows, thus supporting property market and financial activities.
MTI has also upgraded its first quarter GDP growth to 4.1% from 3.9%, given a “better than expected” manufacturing outturn, note Chua and Lee.
In sequential terms, the economy expanded by 1.4% in the second quarter, reversing the 0.5% contraction in the 1Q2025.
In the first half of the year, real GDP growth averaged 4.2% y-o-y.
Manufacturing and services growth accelerate
Meanwhile, manufacturing growth surged to 5.5% in the 2Q2025, from 4.4% in the first quarter.
Within the industry, output across all clusters expanded, except for chemicals and general manufacturing.
Construction growth rose 4.9% in the second quarter and accelerated to 4.4% on q-o-q seasonally adjusted terms.
Growth in general was driven by an increase in public sector output.
In the second quarter, services growth picked up to 4.1%, while wholesale and retail trade as well as transportation and storage rose 4.8% from a year ago.
Wholesale trade growth continued to be driven by machinery, equipment and supplies, while transport and storage was fuelled by water transport.
These segments, note Chua and Lee, were mentioned by MTI to have been supported by the Southeast Asian region’s frontloading activities during the 90-day US tariff pause.
The retail sector also expanded as both motor vehicle and non-motor vehicle goods volumes grew.
Retail had grown by a marginal 0.1% in the first quarter, with vehicle sales rising but non-vehicles sales declining.
Infocomm, professional services and the finance and insurance sectors all saw steady growth in the second quarter.
This was supported by strong demand for IT and digital solutions, head offices and business representative offices, as well as a continued expansion in the banking and payments segments.
Growth in accommodation and food services, real estate, admin and support services and other service sectors accelerated by a faster 3.4% in the 2Q2025, from 2.3% in the first quarter, with all sectors expanding.
Chua and Lee add that MTI points to accommodation in the quarter being supported by the growth in visitor arrivals, which came in 6% higher in between April and May thanks to the recovery in Chinese visitors and the Lady Gaga concert.
What other analysts say
Not unlike their peers, Barclays Research economists Brian Tan and Liu Hongying have also raised their 2025 GDP projections.
With GDP growth in the first half already reaching 4.2% y-o-y, they have raised their full-year forecast to 2.0% from 1.0% previously.
On the other hand, Tan and Liu have opted to maintain their 2026 GDP forecast of 1.0%.
“In particular, we assume in 3Q2025 a visible but nonetheless partial reversal of the 1.4% q-o-q expansion in 2Q2025 as export frontloading subsides, followed by a stabilisation in 2026,” write the pair.
They also note that while MTI did not revise its official 2025 GDP growth forecast range of 0.0% to 2.0%, they “suspect” policymakers also believe the 4.2% y-o-y performance for 1H2025 is “mathematically more likely” to put the full-year outcome closer to the top-end of the range than the middle.
Tan and Liu add: “While we acknowledge the risk that the 2Q2025 GDP outperformance could lead to a delay, our base case remains that the MAS will opt to reduce the slope of its $SNEER policy band to zero this month, rather than waiting.”
Similarly, OCBC Investment Research (OIR) chief economist Selena Ling has upgraded her 2025 GDP growth forecast from 1.6% to 2.1%.
She notes that even with the tariff and geopolitical uncertainties which could contribute to a sharp moderation in Singapore’s growth momentum in the second half, full-year growth should come in “slightly above” the 2% y-o-y handle.
“For now, the 10% tariff for Singapore’s exports to the US looks like the baseline level, but the key to monitor ahead would be potential sectoral tariffs on semiconductors and/or pharmaceuticals which accounted for 41.4% and 6.6% respectively for industrial output and 11.2% and 7.9% of non-oil domestic exports (NODX) in 2024,” writes Ling.
She adds that while the US’ core consumer price index (CPI) report is “widely expected” to accelerate to 2.9% y-o-y and could reinforce market worries of tariff pass-through effects into the US economy, the anticipated impact from China’s diversion of exports from the US end-markets to other markets could be disinflationary for the rest of the world.
Ling adds: “That said, the MAS monetary policy review due later this month may adopt a ‘wait-and-see’ mode barring downside core CPI risks, after effecting two earlier S$NEER slope reductions in January and April 2025.”
Singapore’s core CPI, she notes, while having averaged 0.6% y-o-y from January to May, could “edge up" given the lower 2H2024 base effects.
While the domestic labour market conditions are gradually cooling, domestic demand is well-supported amid ample local liquidity, she adds.
With this, Ling forecasts 2025’s headline and core inflation to stand at 0.9% and 1.2% respectively.
She notes that fiscal relief is “already forthcoming”, thanks to SG60 vouchers and the new Business Adaptation Grant.
“The Economic Resilience Taskforce could announce more measures in time to come as necessary. All this suggests that the Singapore economy is in a good place for 2025,” concludes Ling.
Meanwhile, Barnabas Gan of RHB Bank Singapore remains cautious. He has kept his 2% forecast for 2025, and has flagged downside risks ranging between 0.5% and 1% should tariff tensions escalate further.
Gan expects export demand to remain subdued, no thanks to the ongoing headwinds seen throughout 2H 2025.
