Economy up 3.8% YoY in Q1

Growth forecast cut to 0–2%.

Singapore’s economy grew 3.8% year-on-year in the first quarter of 2025, a slowdown from the 5% expansion recorded in the previous quarter, according to advance estimates released by the Ministry of Trade and Industry (MTI).

On a quarter-on-quarter (QoQ) seasonally-adjusted basis, the economy contracted by 0.8%, reversing the 0.5% growth seen in the fourth quarter of 2024. The decline was mainly driven by weaker output in the manufacturing sector and outward-oriented services such as finance and insurance, reflecting softening global demand.

By sector, manufacturing grew by 5% YoY, down from 7.4% previously, with growth supported by most clusters except chemicals and general manufacturing. However, the sector shrank 4.9% on a QoQ basis.

The construction sector expanded 4.6% YoY, slightly higher than the 4.4% growth in Q4 2024, supported by both public and private sector demand. QoQ, it contracted by 2.3%, reversing the 0.3% expansion in the previous quarter.

The wholesale and retail trade as well as the transportation and storage sectors, grew by 4.2% YoY, easing from 5.6% in Q4, with growth supported by machinery and equipment wholesale trade, and water transport and support services. QoQ, this group expanded 0.5%, rebounding from a 0.1% decline.

Additionally, the group comprising information and communications, finance and insurance, and professional services grew by 3% YoY, slower than the 4.4% growth previously.

Demand for IT and consultancy services remained strong but the group contracted by 5.0% quarter-on-quarter, reversing the 5.9% expansion in Q4.

Moreover, the remaining services sectors, including accommodation, food services, real estate, and administrative and support services, maintained 2.5% YoY growth, with the real estate sector benefiting from increased private residential transactions. These sectors grew 1.4% on a QoQ basis, up from 0.3% in Q4.

MTI has downgraded Singapore’s full-year GDP growth forecast for 2025 to a range of 0.0% to 2.0%, from its earlier forecast of 1% to 3%. The revision comes amid growing global uncertainty driven by escalating trade tensions, especially between the United States and China.

The ministry noted these developments are expected to weigh heavily on global trade, slow consumption in the US due to higher import costs, and stall China’s export growth.

Weaker external demand will likely hit Singapore’s manufacturing, wholesale trade, and transportation and storage sectors. The finance and insurance sector may also be affected by reduced trading activity, softer business sentiment, and slower investment growth. Risk-off attitudes could hurt banking, fund management, and payment services.

Overall, the worsening global outlook is expected to dampen business and consumer confidence, reducing both investment and spending.

MTI highlighted significant downside risks, including the possibility of a deeper pullback in economic activity, a full-blown global trade war, and destabilising capital flows that could impact financial systems.

The ministry said it will continue to monitor developments closely and adjust the forecast if needed.