Singapore’s Economy Grows 1.4% in Q2 2025, Avoiding Recession

SINGAPORE – Singapore‘s economy grew by 1.4% in the second quarter of 2025, escaping a technical recession after a 0.5% contraction in the first quarter. This growth was driven by a robust performance in the manufacturing sector, which expanded 5.5% year over year, according to government data released on June 27, 2025.

The year-over-year growth rate in the second quarter also surpassed expectations, with a Reuters poll of economists predicting only a 3.5% increase. Previously, the economy had expanded 4.1% in the first quarter, indicating a slight acceleration in economic activity.

Analysts define a technical recession as two consecutive quarters of negative GDP growth. Despite the positive growth in Q2, analysts caution about significant uncertainty moving forward, particularly due to unclear tariff policies from the United States. In April, the Ministry of Trade and Industry (MTI) had adjusted Singapore’s GDP growth forecast down to between 0% and 2% for 2025.

While Singapore has not been subjected to “tariff letters” from U.S. President Donald Trump, it still faces a baseline 10% tariff with the U.S., despite a trade deficit and a free trade agreement established in 2004. An economic resilience task force formed in April is rolling out grants to support businesses affected by ongoing global trade tensions.

The GDP release precedes a monetary policy decision by the Monetary Authority of Singapore (MAS) expected later in July. In May, the MAS highlighted potential risks to Singapore’s economic outlook from financial market volatility and decreased demand abroad.

Inflation data reported earlier in May may influence this decision, showing a headline inflation rate of 0.8%, the lowest since February 2021. Core inflation, which omits accommodation and private transport costs, decreased to 0.6% from 0.7% in April.