Singapore GDP expected to grow by 2.5%-3% in 2025 amid external risks

SINGAPORE: Singapore’s economy is projected to expand by 2.5%-3% in 2025, supported by resilient growth in the manufacturing and services sectors.

However, risks from US protectionist policies, geopolitical tensions, and a slowdown in global growth could temper this outlook. According to UOB, Singapore’s economic growth in 2025 will likely be in line with the 2.5% expansion seen in 2024.

The bank highlights that the manufacturing sector, driven by global demand for electronics, and the services sector, bolstered by finance, trade, and communication, will remain key contributors to the economy.

Additionally, robust growth in the construction sector is anticipated, supported by ongoing infrastructure projects.

However, UOB warns of external risks, particularly US protectionist policies under the Trump administration, geopolitical uncertainties, and a potential peak in the electronics cycle, which could weaken growth in the year’s second half.

RHB, meanwhile, is more optimistic, forecasting GDP growth at the upper end of the official 1%-3% range for 2025.

Their outlook points to strong performances in the manufacturing sector, particularly in electronics and precision engineering, alongside steady expansions in the services and construction sectors.

Despite the positive projections, RHB also notes potential challenges. These include a slowdown in major economies such as the US and China and possible disruptions from global trade tensions and geopolitical issues.

However, the bank anticipates that exports will drive growth in the year’s first half, aided by a shipment surge ahead of expected US tariffs.

Both UOB and RHB expect the Monetary Authority of Singapore to maintain its current policy stance through mid-2025, supported by stable core inflation, which is projected to remain within the 1.5%-2.5% range.

While external risks persist, the two financial institutions maintain a cautiously optimistic outlook, underlining the resilience of Singapore’s economy in the face of global uncertainties.