Singapore upgrades 2025 growth forecast but warns that outlook remains 'clouded by uncertainty'

The Ministry of Trade and Industry (MTI) upgraded Singapore's economic growth forecast, but warned that risks remain amid uncertainties from US tariff policies.

Singapore's full-year GDP growth forecast was upgraded to a range of 1.5 to 2.5 per cent, up from 0 to 2 per cent, said MTI on Tuesday (Aug 12).

The upgrade comes after a better-than-expected performance in the first half of 2025 — the economy grew by 4.4 per cent in the second quarter of 2025, extending the 4.1 per cent growth in the first quarter.

GDP growth in the second quarter was also revised upwards from 4.3 per cent in advance estimates provided in July.

This is the second change to Singapore's growth forecast for the year.

GDP growth was projected to be between 1 and 3 per cent in February, but was slashed in April to a range of 0 to 2 per cent after US President Donald Trump introduced tariffs on global trading partners.

However, the 90-day pause on tariffs staved off the potential negative impact on global trade, resulting in the performance of most advanced and regional economies being "more resilient than expected", said MTI.

De-escalation in trade tensions has also provided a more optimistic backdrop for Singapore's economic outlook.

Growth boosted by front-loading

For the first half of 2025, Singapore's GDP growth was 4.3 per cent year-on-year.

The ministry said growth in the second quarter was primarily driven by the wholesale trade, manufacturing, finance & insurance, and transportation & storage sectors.

In particular, the wholesale trade and transportation & storage sectors were boosted by front-loading activities in the region ahead of the implementation of US tariff measures.

Front-loading happens when businesses bring their orders and purchases forward in anticipation of higher tariffs.

But the food & beverage services sector shrank, which is partially due to a spike in outbound travel by locals.

Outlook remains 'clouded by uncertainty'

Despite encouraging improvements in the global economy, MTI warned that the economic outlook for the rest of the year remains "clouded by uncertainty".

With the continued unpredictability of US trade policies and the potential onset of sectoral tariffs, the risks to Singapore's economy are tilted to the downside, the ministry said.

"Against this backdrop, Singapore's economic growth is expected to slow in the second half of the year compared to the first half because of slower growth in outward-oriented sectors," said MTI, adding that growth in the wholesale trade sector is expected to weaken as front-loading effects wane.

Outlook for the food & beverage services sector also remains dim as locals continue to shift their spending abroad.

But there are some bright spots, particularly in the transport engineering cluster and the precision engineering cluster. 

"MTI will continue to monitor developments in the global and domestic economies closely, and make adjustments to the forecast if necessary over the course of the year," said MTI's permanent secretary Dr Beh Swan Gin.

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dana.leong@asiaone.com