Since MAS’s last monetary policy statement in April, the central bank notes that global economic growth has been “more resilient” than expected, with global manufacturing production remaining steady on the back of the front-loading of orders and artificial intelligence (AI)-related investments.
Singapore’s GDP growth for the 2Q2025 was stronger-than-expected as the Ministry of Trade and Industry’s (MTI) advanced estimates showed a 4.3% y-o-y growth and 1.4% q-o-q expansion, reversing from the previous quarter’s 0.5% contraction.
That said, over the rest of the year, growth momentum is expected to moderate as front-loading activity fades, policy uncertainty continues to weigh on demand and the previously delayed tariffs come into effect. However, the risk of a sharp near-term slowdown in global growth has eased, supported by a general de-escalation in trade tensions and more benign financial conditions since April.
Singapore’s GDP growth is also likely to moderate in the 2H2025 following its “strong pace” in 1H2025. The trade-related sectors, especially, should see a slow down even as activity in the construction sector as well as segments within financial services are supported by a pickup in infrastructure investment and more “accommodative” financial conditions.
See also: Singapore’s core inflation rate cools to four-month low
The central bank sees prospects for the Singapore economy to remain uncertain especially in 2026 with global changes in tariff rates impacting the performance of Singapore’s externally-oriented sectors.
“Renewed trade conflict, financial or geopolitical shocks would also exacerbate the drags posed by the global slowdown, and in turn weigh on domestic GDP growth,” says MAS.
In the near-term, the MAS believes inflationary pressures should remain contained with MAS core inflation remaining stable at 0.6% y-o-y in 2Q2025. However, core inflation is likely to increase slightly in the later part of 2025 as the effects of the enhanced healthcare subsidies introduced late in 2024, as well as the global oil price decline, tapers.
MAS core inflation and headline inflation are forecast to average between 0.5% to 1.5% in 2025.
