Singapore Dodges Recession on Manufacturing Boost, Still Warns of ‘Uncertainty’

Singapore just avoided slipping into a recession. Singapore’s economy saw modest growth in Q2 2025, driven by an unexpected rise in manufacturing output. That’s a big win, especially after months of worry over slowing global trade and weak demand.

We’ve seen signs of pressure, with services and exports feeling the heat. But a rebound in factory output helped keep the country in the green. The Ministry of Trade and Industry confirmed this growth but also issued a warning: uncertainty still lies ahead.

We’ll analyze what’s driving the recovery, what risks remain, and how policymakers are planning for the rest of the year. Let’s take a closer look at Singapore’s narrow escape and what it could mean for the road ahead.

Q2 Economic Snapshot

In April, June, Singapore’s economy expanded by 4.3% compared to the same quarter last year, beating expectations of 3.5% On a seasonally adjusted quarterly basis, GDP grew 1.4%, reversing the Q1 decline and averting a technical recession. The Ministry of Trade and Industry (MTI) flagged a potential slowdown in H2, though first-half growth averaged a strong 4.2%.

Manufacturing Sector Rebound

Manufacturing expanded 5.5% year-on-year, up from a 4.4% gain seen in the first quarter. This industry accounts for roughly 17% of the country’s total economic output. Every cluster grew except chemicals and general manufacturing. The surge came from factories rushing out orders ahead of scheduled U.S. tariffs, especially in electronics and semiconductors.

Services and Construction: Mixed Results

Services and construction also helped. Construction output rose 4.9% year‑on‑year, fueled by public sector projects. Services overall grew around 4.8%, led by wholesale trade, transport, finance, and ICT. Retail sales improved too, thanks to stronger motor vehicle purchases and tourism returning.

Uncertainty Ahead: Domestic and Global Risks

MTI signaled that the latter half of 2025 may face heightened uncertainty and possible economic challenges. The ongoing U.S. tariff threat remains a key risk. Singapore exports,11% to the U.S, a 10% baseline tariff. About 55% of exports are affected, including semiconductors, electronics, and pharmaceuticals. Trade Minister Gan Kim Yong warns that growth could slow over the next 6–12 months.MAS also warned that these tariffs act like a “production tax” and could shock demand.

Policy Response and Economic Strategy

MAS is keeping monetary policy steady to balance inflation and growth. The government lowered its 2025 GDP forecast to 0–2%, down from 1–3%. Trade Minister Gan formed an economic resilience task force in April to help businesses adapt. He is traveling to the U.S. this month to negotiate tariff relief, especially on pharmaceuticals.

Sector-by-Sector Outlook for H2 2025

• Manufacturing: Expected to decelerate as early bulk orders begin to taper off.
• Trade-linked services: Could face reduced demand due to global tensions.
• Construction: Public infrastructure projects may keep this sector steady.
• High-value industries like pharma, AI, and green tech could be key targets in upcoming budgets.

Conclusion & Outlook

Singapore has so far avoided a technical recession thanks to strong manufacturing and public spending. But global tariffs and slowing foreign demand pose real risks. We’ll be watching output data, trade flows, and U.S. tariff developments closely. If Singapore can steer through the rest of 2025 without major shocks, growth may stay modest, but stability isn’t guaranteed.

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This content is for informational purposes only and not financial advice. Always conduct your research.