Factory output up 8%, but outlook weakens on trade risks: analyst

The firm forecasted that Singapore’s Industrial Production Index (IPI) will grow by 3.0% YoY in 2025.

Whilst Singapore’s manufacturing output showed strong growth in June, CGS International is maintaining a cautious outlook for the second half of the year due to renewed trade policy risks and fragile business sentiment.

In its latest economic update, the firm forecasted that Singapore’s Industrial Production Index (IPI) will grow by 3.0% YoY in 2025, citing potential sector-specific tariffs from the United States as a key downside risk.

Although the IPI surged 8.0% YoY in June, CGS analysts stressed that the underlying conditions remain uncertain.

According to CGS, business expectations have deteriorated, particularly within the electronics cluster, where firms anticipate a slowdown in export orders and overseas deliveries over the coming months.

The Manufacturing Purchasing Managers' Index (PMI) returned to the neutral threshold of 50.0 in June, recovering from two months of contraction. However, CGS attributed the modest improvement to short-term optimism from recent trade truces involving the US, UK, and China.

Despite the cautious tone, CGS expects Singapore’s second-quarter GDP to stay on track, supported by earlier gains in electronics and non-oil domestic exports (NODX).

Still, it warned that momentum may soften in the second half as manufacturers face a more uncertain external environment.

“We believe the sector’s momentum may soften in the 2H25, as uncertainties surrounding sector-specific tariffs are likely to continue weighing on business sentiment,” the report stated,

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