Singapore: GDP growth accelerates in Q2
GDP growth upwardly revised: The statistical office slightly revised Q2 annual GDP growth upward to 4.4% from the 4.3% advance estimate, improving Q1’s 4.1% increase, and posting one of the strongest results in the past two years.
On a seasonally adjusted quarter-on-quarter basis, economic activity bounced back, growing 1.4% in Q2 after a 0.5% fall in the previous period.
Consumption and exports drive the acceleration: Domestically, year-on-year private consumption gained traction, rising 3.9% in the second quarter (Q1: +3.3% yoy), bolstered by lower inflation and still-tight labor market conditions. Additionally, public consumption bounced back, growing 6.7% in Q2 (Q1: -7.9% yoy), likely buttressed by pre-electoral spending ahead of May elections. That said, fixed investment decelerated to 4.2% in Q2 (Q1: +6.4% yoy), hampered by a high base of comparison, but remained robust, supported by solid residential construction activity.
On the external front, exports of goods and services increased 10.3% on an annual basis in the second quarter, which was above the first quarter’s 5.8% expansion, mainly driven by continued frontloading ahead of U.S. “reciprocal” tariffs. Similarly, imports growth picked up to 10.1% (Q4 2024: +5.8% yoy). As a result, net exports’ contribution to GDP growth picked up in Q2.
GDP outlook is clouded: Our panelists expect GDP growth to decelerate markedly from current levels through the end of 2025, as the temporary boost provided by frontloading ahead of U.S. tariffs should gradually fade during H2. As a result, our Consensus is for GDP growth to ease in 2025 after hitting a three-year high in 2024. Rising global trade tensions are likely to weigh on exports, and Singapore’s economy will suffer from its status as a global trade hub. Moreover, both private and public spending should decelerate as high base effects kick in and market conditions ease; at least one-third of jobs are linked to exporting activities. On a more positive note, fixed investment growth should remain solid, helped by looser monetary conditions and progress on the Johor-Singapore Special Economic Zone.
Panelist insight: Commenting on the release, Jester Koh, analyst at United Overseas Bank, stated:
“We still expect growth to slow in 2H25 as the front-loading momentum dissipates coupled with some payback effects (from the earlier export front-loading), in addition to the drag from the baseline/reciprocal tariffs itself on Singapore and its key trading partners. […] Furthermore, consumer-facing sectors (F&B, retail trade, accommodation) could face increasing headwinds from a cooling domestic labour market.”
On a similar note, Chua Han Teng, analyst at DBS Bank, said:
“There will also be payback from the strong front-loading of exports during the reciprocal tariff pause, which was intended to pre-empt threatened higher US tariffs. Base effects will be adverse in 2H. Activities in the trade-related manufacturing, wholesale trade, as well as transport & storage sectors will moderate, bearing the brunt of the overall weakness, after registering robust growth.”