Singapore economy grows 3.9% in Q1 2025 but full-year outlook cut amid global uncertainty

SINGAPORE: Singapore’s economy expanded by 3.9% in the first quarter of 2025 compared to the same period last year but with global trade conditions deteriorating and earlier gains expected to ease, the government has trimmed its growth forecast for the rest of the year.

Compared to the fourth quarter of 2024, which saw a 5% increase, the first quarter of 2025 reflects a deceleration.

On a quarter-on-quarter basis, adjusted for seasonal fluctuations, the economy shrank by 0.6%, reversing the 0.5% growth seen in the previous three months.

In light of these trends, the Ministry of Trade and Industry (MTI) revised its full-year GDP growth forecast to between 0.0% and 2.0%, down from its earlier projection of 1.0% to 3.0%.

Despite the quarterly contraction, some sectors continued to provide support. Wholesale trade, manufacturing, and finance and insurance were the top contributors to growth in the first quarter. Part of this uptick, particularly in manufacturing and wholesale trade, was driven by front-loading activity—businesses speeding up their imports and exports in anticipation of higher tariffs in the US.

However, MTI cautioned that the lift from front-loading is temporary. As global demand cools and advanced shipments taper off, industries such as transportation and storage could come under pressure, especially with slower movement of goods by sea and air.

On the domestic front, the picture was less encouraging. Accommodation and food services was dragged down by underperformance in higher-end hotel segments.

Retail trade also struggled to gain traction, given a combination of more Singaporeans shopping overseas and growing uncertainty in the job market.

The finance and insurance sector is also expected to moderate in the months ahead.

MTI pointed to weaker trading activity and a slowdown in payments-related services as indicators of a broader cooling in business sentiment and consumer confidence.

The ministry cited external pressures like ongoing geopolitical tensions, particularly the knock-on effects of rising tariffs between the United States and China, as key reasons for the revised forecasts.