Singapore’s industrial production growth projected to slow in H2

HB analysts view the uptick as temporary, boosted by transitory drivers.

Singapore’s industrial production growth is projected to slow significantly in the second half of 2025, with full-year expansion expected to moderate to 2.0%, down from 4.8% YoY growth in the first half, according to RHB.

According to firm, the deceleration is being driven by several factors, including the fading impact of front-loading activity in global trade, slowing external demand, and renewed tariff-related pressures—especially in the semiconductor and pharmaceutical sectors.

Despite a sharp 7.1% YoY rise in industrial production in July, RHB analysts view the uptick as temporary, boosted by transitory drivers such as aerospace demand tied to tourism recovery and increased domestic sales of consumer electronics.

Transport engineering output in July rose 15.8%, supported by a 22.7% jump in aerospace manufacturing and maintenance work. Electronics grew by 13.1%, with the infocomms and consumer electronics segment surging by 86.8%.

Precision engineering also expanded by 9.6%, driven by machinery and component production. However, general manufacturing remained a drag, falling 9.7% YoY.

RHB noted much of the strength in these sectors could be short-lived. The second half of the year will be shaped by base effects from exceptionally strong growth during the same period in 2024, as well as rising tariff risks following the expiry of temporary trade reprieves.

The firm highlighted Singapore is particularly vulnerable due to its high trade-to-GDP ratio, with potential tariffs on pharmaceuticals and electronics having a disproportionately large impact.

Despite the robust July data, RHB is maintaining its full-year industrial production and GDP growth forecasts at 2.0%.

RHB suggested there is upside potential to 3.0% if domestic demand and tourism-related momentum persist, but cautions that downside risks—particularly from global trade uncertainties—are likely to dominate the outlook for the remainder of 2025.

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