Singapore's economy grew by 4.3% y-o-y in the second quarter this year, extending a growth of 4.1% in the preceding first quarter, according to advanced estimates from the Ministry of Trade and Industry.
On a quarter-on-quarter seasonally-adjusted basis, the economy expanded by 1.4%, a turnaround from the 0.5% contraction in the first quarter of 2025.
For the first half of 2025 as a whole, GDP growth averaged 4.2% year-on-year.
"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," says MTI.
Even with tariff worries, the manufacturing sector in the second quarter was up 5.5%, a pick up from 4.4% in the previous three months.
Growth was driven by output expansions across all clusters, except for the chemicals and general manufacturing clusters, says MTI.
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On a q-o-q seasonally-adjusted basis, the sector grew by 0.1%, a reversal from the 5.5% contraction in the first quarter.
The construction sector, which is widely favoured by investors because of its growth prospects, expanded by 4.9% y-o-y in the second quarter, easing slightly from the 5.1% growth in the preceding quarter.
Growth during the quarter was supported by an increase in public sector construction output. On a quarter-on quarter seasonally-adjusted basis, the sector posted growth of 4.4%, reversing the 1.8% contraction in the previous quarter, says MTI.
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Among the services sectors, the wholesale & retail trade and transportation & storage sectors collectively grew by 4.8% in the second quarter, extending the 4.6% growth in the previous quarter. All sectors within the group expanded during the quarter. The group of sectors comprising the information & communications, finance & insurance and professional services sectors expanded by 3.8% in the second quarter, following the 3.7% growth in the previous quarter.
"Growth in the finance & insurance sector was largely driven by banking activities, as well as activities auxiliary to financial activities," says MTI.
The preliminary GDP estimates for the second quarter of 2025, including performance by sectors, sources of growth, inflation, employment and productivity, will be released in the Economic Survey of Singapore in August 2025.
Maybank's economist Brian Lee is cheered by the numbers, as he upgraded his 2025 full year forecast from 2.4% to 3.2%, and for 2026 to 2% from 1.8%.
"The frontloading boost during the 90-day tariff pause and de-escalation in the US-China tariff war drove manufacturing and regional trade activities. A construction boom and falling interest rates are also cushioning Trump’s tariff shocks," says Lee.
Lee believes that MTI, which has held its 2025 forecast at a range of between 0 and 2%, will eventually raise the projection to 2 and 3% when the finalised 2Q numbers are released next month.
Selena Ling of OCBC has similarly turned more optimistic, although her projection remains more subdued at 2.1% growth this year from 1.6% previously.
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She warns that the external landscape remains "very fluid". While much certainty surrounds US tariffs, the anticipated impact from China's diversion of exports to US end-markets to other markets could be disinflationary for other economies.
Ling believes that the Monetary Authority of Singapore, in its scheduled policy review later this month, may adopt a "wait and see" mode.
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.
