Singapore has retained its 2025 economic growth forecast at 0-2%, despite a slightly stronger-than-expected 3.9% year-on-year GDP growth in the first quarter, the Ministry of Trade and Industry (MTI) announced on Thursday.
Robust activity in the wholesale trade, manufacturing, and finance and insurance sectors drove the modest outperformance, surpassing advance estimates of 3.8%.
However, the ministry cautioned that the global economic landscape remains fraught with uncertainty, particularly due to ongoing trade dynamics. A recent 90-day truce on U.S.-China tariffs has marginally improved Singapore’s external demand outlook, but MTI emphasized the need for vigilance as global trade tensions persist.
Q1 Growth Exceeds Expectations
The Singapore economy expanded by 3.9% in Q1 2025, a slowdown from the 5% growth recorded in Q4 2024 but above the government’s initial 3.8% estimate. On a quarter-on-quarter seasonally adjusted basis, GDP contracted by 0.6%, which is an improvement over the forecasted decline of 0.8%, although it reversed the 0.5% growth recorded in the previous quarter.
MTI attributed the Q1 performance to strong contributions from key sectors, with manufacturing and wholesale trade benefiting from front-loading activities in anticipation of U.S. tariff hikes.
Real-time data indicates that Singapore’s manufacturing output grew by 4.2% year-on-year in Q1, supported by electronics and precision engineering, according to industry reports.
Cautious Outlook Amid Trade Truce
The MTI’s decision to maintain the 0-2% growth forecast reflects a cautious stance, following a downgrade in April prompted by U.S. President Donald Trump’s sweeping tariff announcements.
The subsequent 90-day U.S.-China trade truce, aimed at negotiating a broader deal, has slightly alleviated concerns. “The external demand outlook for 2025 has improved marginally since April,” said MTI Permanent Secretary Beh Swan Gin at a press conference.
However, he stressed that “significant uncertainty” persists, with global trade dynamics and geopolitical tensions posing risks. Recent analyses suggest that U.S. GDP growth for 2025 is now projected at 1.8-2.2%, up from earlier estimates of 1.5%, partly due to the tariff pause.
Did You Know?
Singapore’s economy is one of the world’s most open, with total trade (exports plus imports) in 2024 equivalent to over 300% of its GDP, making it highly sensitive to global trade policies.
Sectoral Strengths and Challenges
Singapore’s Q1 growth was underpinned by resilience in key industries. The wholesale trade sector saw a 4.5% year-on-year increase, driven by export demand for electronics, while manufacturing benefited from a global uptick in semiconductor demand, with production up 6% in March 2025, per industry data.
The finance and insurance sector also contributed, supported by strong regional financial activity. However, MTI noted that the anticipated tariff hikes had prompted preemptive stockpiling, which may not sustain momentum. The ministry plans to closely monitor global developments and adjust forecasts as needed in the coming quarters.
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Navigating Global Uncertainties
Despite the improved outlook, Singapore’s economy remains vulnerable to external shocks. The U.S.-China truce, while positive, is temporary, and unresolved trade negotiations could reinstate pressures. Additionally, global supply chain disruptions and inflationary trends continue to challenge export-driven economies like Singapore.
MTI highlighted that Singapore’s trade-dependent economy, with exports accounting for 180% of GDP in 2024, faces heightened risks if trade tensions escalate. The ministry’s proactive monitoring aims to ensure agility in responding to evolving global conditions.
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