This photo shows the Marina Bay Sands Hotels Resort and Garden next to the domes of the bay with the horizon of the city in Singapore on June 27, 2025.
Roslan Rahman | AFP | Getty images
Singapore’s economy grew by 1.4% in the second quarter of 2025, avoiding a technical recession, since it reversed the contraction of 0.5% recorded in the first three months of the year.
About a year after year, the country’s economy expanded 4.3% in the second quarter of 2025, accelerating 4.1% in the first three months and exceeding expectations. A survey of Reuters economists had predicted a growth of 3.5%.
A technical recession is commonly defined as two consecutive decreases from quarter to quarter in the GDP of a country. The analysts surveyed by Reuters had estimated a growth of 0.6% of quarter to quarter.
The growth of GDP was led by the manufacturing sector, which expanded 5.5% year after year, compared to 4.4% in the first quarter of 2025. The sector represents approximately 17% of the country’s economy.
Song Seng Wun, economic advisor to CGS International, attributed the reversal in GDP growth to pause in “reciprocal tariffs” until August 1, which were announced in early April.
While the companies rushed their orders in the first quarter to get ahead of the “Liberation Day” rates, Song told CNBC, they could have chosen to load even more exports, “in case the rate [pause] They did not extend. “
Shivaan Tandon, economist from Economics Capital Markets, made a similar observation about Singapore that benefited from the frontal load. However, he hopes that this impulse will fade, and “the Singapore export -oriented services sector will retire and the manufacturing activity will continue to fight.”
In addition to the frontal load of exports, Singapore’s economy also benefited from the decallation in the United States tariff war
The construction sector expanded 4.4% in the second quarter, an investment of the 1.8% contraction in the first three months of the year.
‘Uncertainty’ still ahead
Despite the rhythm of GDP, Singapore ‘Ministry of Commerce and Industry said in its statement that “there is still significant uncertainty and downward risks in the global economy in the second half of 2025 given the lack of clarity on the tariff policies of the United States”
In April, MTI had reduced the growth of the country’s GDP to 0%-2%by 2025, below its previous 1%-3%forecast. Singapore registered a GDP growth figure of 4.4% in 2024.
Unlike other countries in Southeast Asia that have been beaten with “tariff cards”, Singapore has not received such a “letter” from the president of the United States, Donald Trump.
However, Singapore still faces the base rate of 10% of the USA, despite administering a commercial deficit with the USA and having a free trade agreement since 2004.
CGS’s song said the last growth rate of Singapore’s GDP, along with other encouraging signs in the economy, suggested “some rising surprise for the last MTI prognosis of 0%-2%.”
Despite that, he warned that the commercial environment is still very volatile, and that the ministry will not be “hurried” to review its forecasts yet.
“Any drag of global trade as a result of tariffs and other barriers, will negatively affect Singapore, [to what] We do not know extension. It is difficult to calculate, because it can be a product by the product or very specific sector of the country. “
Tandon de Capital Economics expects Singapore’s economy to decrease in the second half of the year.
“Since growth will weaken and inflation will probably remain very low, we believe that the case for a greater monetary loosening of the Central Bank remains firmly intact,” Tandon added.
Maybank’s Chua was more optimistic, predicting a 2.4% GDP growth in 2025, above MTI estimates.
“It is likely that there are improvements for the market and the official growth forecasts,” he said, adding that the bank expects a “modest deceleration in regional commercial activities, but not a contraction in the second half.”
The Singapore government announced last week the deployment of subsidies to help companies face the impact of world commercial tensions.
The launch of GDP also advances to a monetary policy decision of the Central Bank of the country at the end of July.
At its May meeting, the Monetary Authority of Singapore loosen its policy for the second consecutive time, saying that “there are downward risks for the economic perspective of Singapore derived from episodes of volatility of the financial market and a more clear drop in final demand abroad.”
The most also warned that a more abrupt or persistent weakening in global trade will have a significant impact on the commercial sectors of Singapore and, in turn, on the economy in general.
However, the country’s inflation numbers support a rate cut.
The main inflation rate of Singapore fell to 0.8% in May, its lowest level since February 2021, while central inflation, which excludes accommodation and private transport, reached 0.6% in May, compared to 0.7% the previous month.
