- Real GDP growth rates were 1.4% QoQ sa and 4.4% YoY in 2Q, little changed from advance estimates.
- Trade-related sectors will face tariff headwinds amid ongoing global uncertainties.
- Softer labour demand is on the cards.
- MTI sees risks tilted to the downside, despite raising Singapore’s GDP growth forecast for 2025.
- Forecast implications: We maintain our 2025 real GDP growth forecast for Singapore at 2.0%.
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Slower 2H25 growth
We maintain our cautious outlook for 2H25, anticipating slower economic growth following the resilience in 1H25, leaving our full-year growth forecast for Singapore unchanged at 2.0%. The economy averted a technical recession in 2Q, with real GDP growth rebounding to 1.4% QoQ sa, from a 0.5% contraction in 1Q. This was mainly supported by exports front-loading, translating to 4.4% YoY growth in 2Q, compared to 4.1% YoY in 1Q. These were little changed from 2Q advance estimates of 1.4% QoQ sa and 4.3% YoY.
The Ministry of Trade and Industry (MTI) remains cautious on the 2H outlook for both the global and Singapore economies, expecting softer growth. MTI continues to see downside risks, despite raising its 2025 growth forecast for Singapore to a narrower range of 1.5-2.5% from 0.0-2.0%, due to firmer-than-expected 1H performance. The downside risks include 1) re-escalation in tariff actions, 2) shock to financial markets stemming from sharper-than-expected tightening of global financial conditions, and 3) supply disruptions to energy commodities from potential escalations in geopolitical tensions.
We also expect Singapore’s economic growth to face downward pressures in 2H as external demand weakens, due to still-high global tariffs and subdued business sentiment. There will also be payback from the strong front-loading of exports during the reciprocal tariff pause, which was intended to pre-empt threatened higher US tariffs. Base effects will also be adverse in 2H. Activities in the trade-related manufacturing, wholesale trade, as well as transport & storage sectors will moderate, bearing the brunt of the overall weakness, after registering robust growth of 5.2% YoY, 4.7% YoY, and 5.1% YoY, respectively, in 2Q.
Soft labour market outlook
We expect the resilience of Singapore’s labour market to be increasingly tested in 2H25, amid still-elevated global uncertainties. The overall unemployment rate remained low at 2.1% in 2Q, as employment growth firmed compared to 1Q, based on the Ministry of Manpower (MOM)’s 2Q25 Labour Market Advance Release. Higher hiring in the manufacturing and construction sectors outweighed lower services job growth in 2Q, amid supportive economic growth, but will face downward pressures in the coming months.
With firms facing external headwinds from still-high US tariffs globally and associated business uncertainties, we foresee softer labour demand in outward-oriented sectors, particularly those exposed to trade. The MOM’s forward-looking polls show businesses remaining cautious on hiring intentions and wage increases in the coming months, as they limit expansion plans and control labour costs, amid elevated uncertainty.
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