Singapore seen to grow 2.4% in 2025

The economy is expected to beyond expectations despite the impact US tariffs.

Singapore’s gross domestic product (GDP) is projected to grow by 2.4% this year, above the Ministry of Trade and Industry’s forecast range of 0% to 2%.

According to Maybank’s latest Invest ASEAN-Malaysia Conference 2025 report, this expansion is expected despite a possible slowdown in growth and trade in the second half of the year as US’ reciprocal tariffs impact exports.

“A construction boom, falling interest rates and fiscal support will help cushion the blow from a US tariff-induced trade slowdown. Singapore faces a relatively low reciprocal and effective tariff rate compared to other countries,” said Chua Hak Bin, economist at Maybank.

In the first quarter, Singapore’s GDP grew 3.9%, thanks to robust construction (+5.5%) activity, along with better-than-expected manufacturing (+4.0%) and services (+3.6%). Frontloading is driving manufacturing and export growth in the second quarter.

Meanwhile, Thilan Wickramasinghe, head of research for Singapore at Maybank, noted that the Straits Times Index has held up year-to-date despite global volatility.

“Worsening US policy uncertainty, slower China growth and the intensifying hostilities in the Middle East are likely to bolster safe haven flows to Singapore,” he said, noting that the defensive sectors so far this year, such as telcos and utilities, have seen the strongest outperformance.

Maybank also noted that earnings per share downgrades on Maybank Investment Banking Group's coverage have slowed.

“Second quarter may see a pick up on tariff uncertainty, but this should be partly offset by strong domestic drivers, lower tariff impact,” Wickramasinghe said.

Maybank does not expect the downgrade cycle would last for long, with five key themes driving the momentum and valuations, namely domestic resilience, the Johor-Singapore Special Economic Zone, the China stimulus spill-over, rising capital returns, and scaling AI.

“We believe the MAS Equity Review Group’s first set of recommendations in February 2025 demonstrate a strong governmental commitment to revitalising the domestic equities ecosystem,” Maybank said.

Some additional measures being reviewed are enhancing corporate focus on shareholder value creation, attracting more retail liquidity and strengthening investor protections.

“We are optimistic that the successful implementation of these combined measures could have a positive impact on market liquidity and valuation - especially for SMIDs [Small and Mid-Cap stocks],” Maybank said.