Singapore’s GDP rebound in 2Q25 driven by manufacturing and trade

Investing.com -- Singapore’s economy showed signs of recovery in the second quarter of 2025, following a contraction in the first quarter. The latest data suggests that the nation is likely to avoid a technical recession, thanks to improvements in manufacturing output and trade-related indicators.

Manufacturing output in April increased by 2.4% compared to the first quarter of 2025. This growth was largely driven by a rebound in semiconductor production, which helped offset weaker performance in the pharmaceutical sector. Additionally, trade-related indicators saw significant gains, with re-exports to Taiwan surging almost eightfold, possibly due to front-loading effects amid a pause in tariffs.

Bank lending indicators also showed an upward trend in April. While construction progress payments data has not been released, forward-looking contracts awarded in the past two quarters have accelerated, suggesting a potential increase in payments during the second quarter of 2025.

However, the Purchasing Managers’ Index (PMI) ratio of new orders to inventories fell further below 1.00, indicating potential challenges for medium-term production. Historically, when this ratio is below 1.00, manufacturing output excluding the biomedical sector tends to contract year-on-year. The ratio first dropped below 1.00 in February 2025 and continued to decline through May 2025.

Bank of America analysts have projected a volatile GDP trajectory for Singapore in 2025, with sequential growth fluctuating between positive and negative territories. They anticipate a full-year GDP moderation from 4.4% in 2024 to 1.4% in 2025, with a modest rebound to 1.7% in 2026, though still below trend pace. The Monetary Authority of Singapore currently projects the output gap at -0.5% of potential GDP in 2025, with expectations of it remaining negative through 2026.

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