Singapore has avoided a technical recession as the economy grew beyond expectations in the second quarter of 2025.
Singapore's economy is recovering strongly thanks to growth in the manufacturing, services, and construction sectors, despite facing numerous risks from US tariff policies and global trade instability.
MAIN CONTENT
Singapore's economy grew 1.4% year-on-year after seasonal adjustment in the second quarter of 2025, exceeding the forecast of 0.8%.
The construction and services sectors play an important role in the economic recovery.
Risks of slower growth in the second half of the year due to the impact of US tariffs and trade instability.
How did Singapore's economy grow in the second quarter of 2025?
According to preliminary data from the Singapore Ministry of Trade and Industry released on July 14, 2025, the country's economy grew by 1.4% year-on-year after seasonal adjustment, recovering from a 0.5% decline in the previous quarter. This figure is much higher than Bloomberg's forecast of 0.8%, indicating the strong rebound of the economy.
Singapore's GDP grew by 4.3% year-on-year, exceeding the estimated 3.6%. The main reason is attributed to the manufacturing and services sectors, as factories accelerated the completion of export orders in order to meet the new US tariff deadline on August 1, 2025.
The contribution of the manufacturing and services sectors to growth momentum
The manufacturing and services sectors play a key role in helping Singapore avoid the risk of technical recession. Businesses are accelerating the completion of export orders before the new 10% tax takes effect, resulting in a clear 'front-loading' effect.
The 'front-loading' effect boosted exports in the second quarter, but questions remain about economic resilience after the new taxes are implemented.
Selena Ling, Head of Research and Strategy at OCBC Bank, 2025
The services sector also recorded a 4.8% increase year-on-year, especially in wholesale trade, finance, and logistics, driven by high demand before the new tax takes effect.
Why is the construction sector important for Singapore's economic recovery?
The construction sector recovered strongly with a growth rate of 4.4% in the second quarter, compared to 1.8% in the first quarter. This growth is mainly due to public infrastructure projects being accelerated to support the economy amid global trade instability.
What is the impact of US tariffs and trade instability on the outlook for the second half of 2025?
Economists warn that Singapore's economic growth may slow in the second half of the year due to risks from US tariff policies and increasing global trade protectionism. Although Singapore is only subject to a 10% tax compared to 25% like other ASEAN countries, the decrease in trade flows still negatively affects this open economy.
The growth momentum will weaken as the 'front-loading' effect ends and new tax policies come into effect.
Tamara Mast Henderson, ASEAN Economist, Bloomberg Economics, 2025
The Monetary Authority of Singapore (MAS) – the agency responsible for monetary policy – stated that it will remain cautious and is unlikely to make major policy changes unless the global economic situation worsens.
How does the Singapore government and organizations forecast the economy for 2025?
The government has revised its GDP growth forecast for 2025 down to 0-2%, a significant decrease from the 4.4% in 2024. Along with this, analysts forecast that economic growth this year will only reach about 0.9%, reflecting significant challenges from external factors and global market developments.
Frequently Asked Questions
How much did Singapore's economy grow in the second quarter of 2025? It reached 1.4% year-on-year after seasonal adjustment, far exceeding economists' expectations. Which sector contributed the most to the recovery in the second quarter? The construction and services sectors, along with manufacturing, all showed strong growth, supporting economic recovery. How do US tariffs affect Singapore's economy? The 10% tax applied from August 2025 increases pressure but is still lighter than neighboring countries. Will the Monetary Authority of Singapore change its policy in 2025? MAS maintains a cautious policy and has no plans for major changes unless the global situation worsens. What is the growth forecast for Singapore's economy in 2025? The estimated GDP growth for 2025 ranges from 0 to 2%, down from 4.4% in 2024.
Source: https://tintucbitcoin.com/singapore-tranh-suy-thoai-khi-gdp-vuot-du-bao/
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