Singapore at risk for technical recession in H1—analyst

GDP Growth in the second quarter will likely contract by 2.4%.

Singapore is at risk of a technical recession in the first half of 2025, with second-quarter gross domestic product (GDP) expected to contract by 2.4% on a seasonally adjusted quarter-on-quarter basis, said Barnabas Gan, group chief economist and head of market research at RHB.

Gan said March’s industrial production number suggests Q1 GDP to slow to 3.6% YoY.

“Our key conviction is for Singapore's GDP momentum to decline further into Q2 2025. In line with our full-year GDP growth of 2%, Singapore's Q2 2025 GDP is expected to grow by +0.6% YoY against Q1 2025 GDP growth of 3.6% YoY. The downside in global growth, coupled with Singapore's position as a price taker and export-oriented economy, will mean the economy to see weakness in externally facing sectors, especially in the export and manufacturing activities,” Gan said.

RHB expects Singapore’s manufacturing growth to be at 0.5% in 2025, down from the previous 3% estimate. GDP projections are unchanged at 2% YoY, in line with RHB’s base case for tariff risk to further escalate into H2 2025.

“We are most bearish on Singapore's export-oriented sectors such as chemicals, machinery & transport, and manufacturing, on the back of a broader impact of rising trade tensions. Beyond the sectors mentioned above, the biomedical manufacturing and transport engineering sectors may see negative spill-over risks from US-led tariffs. Despite the recent exemption of tariffs on E&E and pharmaceutical imports, we remain cautious - any further escalation of tariffs risks weighing down on Singapore's manufacturing and exports, straining the overall economic growth,” Gan said.