Singapore warns of “uncertainty” after prevention of technical recession

Singapore’s economy increased by 1.4% in the second quarter of 2025, avoiding the technical recession as it reversed 0.5% shrinkage registered in the first three months of the year.

On an annual basis, the country’s economy increased by 4.3% in the second quarter of 2025, accelerating from 4.1% in the first three months and defeating expectations. Economists’ Reuters poll predicts an increase of 3.5%.

The technical recession is usually defined as two consecutive declines in a quarter quarter in the country’s GDP. Reuters analysts have evaluated a 0.6% increase in the quarter.

GDP growth was led by the production sector, which increased by 5.5% compared to a year, compared to 4.4% in the first quarter of 2025. 17% of the country’s economy.

Song Seng Wun, an economic adviser to CGS International, attributes the GDP growth to pause to reciprocal tariffs until August 1, which were announced in early April.

While the business was in a hurry with its orders in the first quarter to outstrip the tariffs for Liberation Day, Song told CNBC, they may have chosen to load even more exports, “only in case the tariff (pause) is not extended.”

Shivaan Tandon, an economist in the Capital Economics markets, made a similar monitoring about Singapore, who took advantage of the previous loading. However, he expects this impetus to fade and the “Services sector oriented towards exporting Singapore will be dropped back and the production activity will continue to fight.”

In addition to the previous export load, Singapore’s economy also takes advantage of de -escalation in the US and China Tariff War, falling interest rates and the construction boom, said Chua Hack Bin, an economist at Maybank Investment Banking Group

The construction sector increased by 4.4% in the second quarter, turning from 1.8% shrinkage in the first three months of the year.

Despite the impact of GDP, Singapore The Ministry of Trade and Industry said in its release that “remained considerable uncertainty and risks in the world economy in the second half of 2025, given the lack of clarity on US tariff policies”

As early as April, MTI reduced the country’s GDP growth to 0%-2%in 2025, which is lower than its previous 1%-3%forecast. Singapore registers a year -round digit for GDP growth of 4.4% in 2024.

Unlike other countries in Southeast Asia, which were affected by Tariff letters, Singapore did not receive such a “letter” from US President Donald Trump.

However, Singapore is still facing the main tariff of 10% from the United States, although it has a trade deficit with the US and has a 2004 free trade agreement.

The CGS song said the latest GDP growth rate in Singapore, along with other encouraging signs in the economy, suggested “A certain surprise for the latest MTI forecast of 0%-2%”.

However, he warned that the commercial environment remains very variable and that the ministry will not be “rushing” to review its forecasts yet.

“Any drainage of global trade as a result of tariffs and other barriers will negatively affect Singapore, (to what) degree we do not know. It is difficult to calculate because it can be a product from the product sector or very specific to the country.”

Capital Economics Tandon is expecting Singapore’s economy to slow down in the second half of the year.

“With growth that will weaken and inflation, which can remain very low, we believe that the case of more cash loosening from the central bank remains firmly intact,” Tandan added.

Maybank’s Chua was more optimistic, predicting GDP growth of 2.4% in 2025, above MTI’s estimates.

“There will probably be improvements to market and official growth forecasts,” he said, adding that the bank is expecting some “modest delay in regional commercial activities, but not shrinking in the second half.”

Singapore’s government Declared last week The deployment of grants to support business to deal with the impact of tension worldwide.

The GDP announcement also came before a decision of the Central Bank of the country later in July.

At his meeting in May, Singapore’s monetary authority loosen your policy for a second direct Time, saying that “there are risks to reduce Singapore’s economic prospects arising from episodes of instability on the financial market and more sharply than the expected decline in final demand abroad.”

Mas also warned that the sharper or constant weakening of global trade would have a significant impact on the Singapore trade sectors, and in turn, a wider economy.

Nevertheless, the country’s inflation number supports a percentage reduction.

Inflation of inflation in Singapore fell to 0.8% in May, its lowest level since February 2021, while the main inflation, which excluded accommodation and private transport, was 0.6% in May, compared to 0.7% a month ago.