- Advance GDP growth rates were 1.4% QoQ and 4.3% YoY in 2Q25.
- The city-state remains exposed to the US tariff roller coaster, with new threats underway in 2H25.
- External demand will soften, due to still-high global tariffs and weak business sentiment.
- Trade-related sectors will bear the brunt of the weakness.
- Policy support to mitigate tariff challenges.
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Avoided technical recession in 2Q25
We maintain our cautious outlook for slower economic growth in 2H25, following data showing Singapore’s economy avoiding a technical recession[1] in 2Q25. Advance real GDP rose by 1.4% quarter-on-quarter seasonally adjusted (QoQ sa) in 2Q25, reversing the 0.5% QoQ sa contraction in 1Q25. This translated to economic growth of 4.3% year-on-year (YoY) in 2Q25, compared to an upwardly revised 4.1% YoY in 1Q25. Economic growth was broad-based across sectors, with a notable pick-up in trade-related expansion in 2Q25, due to front-loading of goods exports during the 90-day US reciprocal tariff reprieve. Modern services and domestic-linked sectors were resilient in 2Q25.
Slower growth in 2H25
Our unchanged Singapore GDP growth forecast for 2025 of 2.0% implies much weaker growth in 2H25. Trade uncertainties will remain elevated in 2H25, casting a shadow over global economic growth prospects. The US has threatened the return of steep tariffs for some of its trading partners starting August 2025 through letters, while eyeing blanket import levies of 15-20% for those yet to be informed, which would be above the current 10% baseline tariffs. Various US sectoral tariffs are also on the agenda. These were despite some de-escalation in trade tensions between the US with China, the UK, and Vietnam through trade deals/frameworks. While Singapore’s economic performance surprised positively in 1H25, external demand and economic growth will face downside pressures, due to still-high global tariffs and weak business sentiment.
[1] A technical recession refers to two consecutive quarters of QoQ sa real GDP contraction.
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