By Jun Yuan Yong
SINGAPORE (Reuters) -Singapore’s economy grew slightly faster than initially estimated, prompting the government to upgrade the city state’s growth forecast for this year even as it warned of downside risks.
Gross domestic product rose by 4.4% year-on-year in the April-June quarter, government data showed on Tuesday, just ahead of an advance estimate of a 4.3% gain released last month.
The trade ministry raised its GDP growth forecast for 2025 to 1.5% to 2.5% from 0.0% to 2.0%, saying it largely reflected a better-than-expected first half performance. In April, the ministry had cut its forecast from 1.0% to 3.0% after the United States announced its plans for global tariffs.
“However, the economic outlook for the rest of the year remains clouded by uncertainty, with the risks tilted to the downside,” it said in a statement.
On a quarter-on-quarter, seasonally-adjusted basis, gross domestic product rose by 1.4% in the April-June period, in line with the advance estimate and following a 0.5% contraction in the first quarter.
Bank of America economists said that the lower end of the GDP growth forecast of 1.5% looks highly improbable and implies a very sharp technical recession from July to December, amounting to a 1.5% contraction in each quarter.
They added in a note that the upper end of the forecast of 2.5% implies a growth slowdown of about 0.4% between the second quarter and the fourth quarter of this year.
“The 2% to 2.5% range thus seems most probable, and we likewise see upside risk to our forecast (of 1.8%),” they said.
At a press briefing on Tuesday, Monetary Authority of Singapore chief economist Edward Robinson said the central bank’s monetary policy stance remains appropriate after accounting for factors that affect Singapore’s domestic growth and inflation outcomes.
“I would also add that a gradualist approach under conditions of uncertainty is useful as we update our assessment in a timely manner at our quarterly reviews,” he said.
In a separate statement, Enterprise Singapore said it was keeping its forecast for non-oil exports at growth of 1% to 3% this year, saying it expected some weakness in the second half after a stronger-than-expected start to 2025.
“In general, as frontloading activities taper and reciprocal tariffs resume from 7 August 2025, these could weigh on global economic activity and trade,” it said in a statement.
Despite having a free-trade agreement and running a trade deficit with the U.S., the wealthy financial hub has still been slapped with a 10% tariff rate by Washington.
President Donald Trump has also said he would impose a tariff of about 100% on imports of semiconductors, with an exemption for companies that are manufacturing in the U.S. or have committed to do so, and a tariff on pharmaceutical imports that would rise to 150% within 18 months and eventually to 250%.
Figures from a central bank report show pharmaceuticals made up 12.3% of the city-state’s exports to the U.S. in 2024, while semiconductors accounted for 1.6% of shipments and other electronics and semiconductor equipment made up 15.0% of exports to the United States.
There will also be indirect impacts on Singapore, a global shipping hub where trade is three times the size of its GDP, if the U.S. tariffs constrict global trade.
Imports from other Southeast Asian countries have been slapped with much higher tariffs of between 19% and 40%.
(Reporting by Jun Yuan Yong; Editing by John Mair and Shri Navaratnam)
