Singapore to benefit from global tech cycle amidst manufacturing resilience

The country’s full-year IP is expected to grow by 3%.

Singapore’s manufacturing sector is poised to capitalise on a positive global technology cycle in 2025, as rising demand for semiconductors and electronics continues to fuel growth, a report by RHB said.

The report anticipates that Singapore’s full-year IP will grow at 3% whilst maintaining GDP growth at 3% over the year. The outlook for the manufacturing sector is cautiously optimistic amidst a robust global and domestic economic landscape.

Electronics, precision engineering, and transport engineering—key pillars of Singapore’s manufacturing base—are forecast to remain strong, bolstered by sustained global demand for electrical and industrial products. The country’s Purchasing Managers’ Index (PMI) remains in expansion territory, reflecting resilient demand for manufactured goods despite uncertainties in the external environment.

The broader global economic landscape also supports Singapore’s growth trajectory. Above-consensus GDP forecasts for both the U.S. and China—projected at 2% and 4.8% respectively—signal continued demand for exports, particularly in tech-related sectors. The expected decline in global interest rates further enhances the investment climate, providing an additional tailwind for manufacturing.

However, geopolitical risks loom. A potential return of a Trump administration in the U.S. could introduce new trade barriers and protectionist policies that may disrupt global supply chains. Singapore, as a highly trade-dependent economy, could experience indirect consequences from U.S.-China tensions, particularly if tariffs on Chinese goods intensify. Businesses may front-load shipments in anticipation of potential trade restrictions, boosting short-term trade figures but introducing long-term uncertainties.

Despite these risks, Singapore’s economic momentum remains intact. GDP growth for 2024 is expected to be revised upward to 4.2%, surpassing initial estimates of 4%. The fourth quarter is projected to record a 5% year-on-year expansion, driven by strong industrial production (IP) data. December’s IP growth of 10.6% outperformed market expectations, with double-digit gains in the electronics and transport engineering sectors.

Whilst manufacturing growth moderated slightly in late 2024 due to seasonal factors, semiconductor production continued to expand, albeit at a slower pace of 11.4% year-on-year in December, down from 34.8% in November. Other segments, such as computer peripherals and consumer electronics, maintained strong momentum with 27.1% and 41.2% growth, respectively.