UOB raises 2025 GDP forecast

UOB expects full-year growth in 2025 to run slightly above potential, but forecasts a slowdown to 1.4% in 2026.

Singapore’s economy is now expected to grow 2.1% in 2025, up from an earlier estimate of 1.7%, according to UOB’s latest macro note.

The upgraded forecast puts growth above the Ministry of Trade and Industry’s official range of 0.0% to 2.0%.

The improved numbers were largely driven by front-loaded exports and production activity, as firms rushed to ship goods ahead of anticipated US tariffs. But analysts warn that this momentum is unlikely to last.

A “payback effect” is expected in the second half, with growth slowing as earlier export gains fade and the impact of reciprocal tariffs begins to take hold.

UOB expects full-year growth in 2025 to run slightly above potential, but forecasts a slowdown to 1.4% in 2026, below trend. The shift reflects the likely drag from global trade tensions and the softening of trade-related services that fuelled much of the earlier gains.

In the second quarter alone, Singapore’s economy grew 4.3% YoY, bolstered by strong gains in construction and trade sectors. Real non-oil re-exports surged 35.7% in April and May compared to the previous year, whilst container throughput also climbed 7.7% in the same period.

However, economists caution that much of this activity is temporary. With US reciprocal tariffs set to take effect on 1 August, and possible additional tariffs targeting pharmaceuticals and semiconductors, Singapore’s highly export-reliant economy remains vulnerable.

Despite recent strength, the report signaled that Singapore may not be out of the woods yet. The Monetary Authority of Singapore is expected to hold off on policy easing in July, but could adjust its stance by October if signs of slowing growth become clearer.