[SINGAPORE] Private-sector economists have turned a shade more optimistic about Singapore’s full-year growth, in the most recent quarterly survey of professional forecasters by the city-state’s central bank on Wednesday (Sep 3).
But expectations have also risen for monetary policy to ease in October, though this remains a minority view.
This is based on the views of 20 economists who responded to the Monetary Authority of Singapore’s (MAS) survey of professional forecasters sent out on Aug 12.
They expect 2025 full-year gross domestic product growth to come in at 2.4 per cent, up from the 1.7 per cent projection they made in the June survey.
This is close to the upper end of the official forecast range of 1.5 to 2.5 per cent, to which was upgraded by the Ministry of Trade and Industry on Aug 12.
The improved outlook came on the back of better full-year prospects for Singapore’s manufacturing, construction, wholesale and retail trade sectors, as well as non-oil domestic exports.
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This was after second-quarter growth outperformed respondents’ expectations in the June survey. They had expected GDP to grow 3 per cent in Q2, but the eventual figure was 4.4 per cent.
This difference was largely because exports, as well as the performance of the manufacturing, construction and wholesale and retail trade sectors, exceeded their expectations.
Improved outlook
In the latest survey, full-year export growth is now expected at 2.2 per cent, up from the previous survey’s forecast of 1 per cent.
Similarly, the construction sector is now expected to expand by 4.7 per cent, instead of 3.3 per cent; wholesale and retail trade by 2.9 per cent, instead of 2.2 per cent; and manufacturing could grow 0.8 per cent, instead of shrinking 0.3 per cent.
In contrast, expectations have dimmed for accommodation and food services. The sector is now expected to grow 0.5 per cent, instead of the 1.5 per cent projection earlier.
Their outlook was unchanged for two indicators: the finance and insurance sector at 3.3 per cent; and private consumption at 3.1 per cent.
Commenting on the survey, economists said the full-year GDP upgrade was unsurprising since Q2 had come in “significantly higher” than market expectations, partly due to frontloading and the artificial intelligence (AI) boom.
“The earlier conservatism probably was in knee-jerk reaction to initial reciprocal tariff levels that were announced on ‘Liberation Day’ and before bilateral trade deals were struck,” said OCBC chief economist Selena Ling.
Still, this is “largely water under the bridge”, she said, now that US tariffs have kicked in after a 90-day pause.
Noting that respondents now expect Q3 GDP to come in at 0.9 per cent, DBS senior economist Chua Han Teng said this marks a “notable deceleration” from the strong over 4 per cent expansion in H1 and 2024.
Conversely, Maybank economist Brian Lee believes fears of a sharp pullback in trade and manufacturing in H2 are “overstated” and has upgraded his outlook to 3.2 per cent.
“Singapore could benefit from a diversion in export orders and strong regional trade volumes, given the re-channelling of US demand away from Chinese exporters,” he said, noting that the city-state faces the lowest tariff rate of 10 per cent in Asia.
“Electronics, which accounts for nearly 40 per cent of Singapore’s manufacturing output, stands out as a bright spot due to the sector’s products being exempt from US tariffs,” he added, even as electronics demand is buoyed by growing global investment in AI.
Inflation expectations stable
The respondents’ full-year outlook for inflation and unemployment remained largely unchanged.
They expect headline inflation to come in at 0.9 per cent, similar to the previous survey.
The expectation for core inflation, which excludes accommodation and private transport, is a shade lower at 0.7 per cent, compared with 0.8 per cent in the June survey.
This follows marginally lower-than-expected inflation in Q2. In the June survey, respondents had pencilled in headline inflation of 0.9 per cent and core inflation of 0.7 per cent for that quarter. The actual outcome was 0.1 percentage point lower for both.
For 2025, the overall unemployment rate is still expected to come in at 2.2 per cent, unchanged from before.
Risks to outlook
Geopolitical tensions – including possible semiconductor and pharmaceutical tariffs – remain the top downside risk to Singapore’s economic outlook, cited by all respondents.
Other oft-cited downside risks were an external slowdown and financial market volatility.
However, milder-than-expected or easing trade tensions were also the top-cited upside risk. This was followed by a sustained tech cycle upturn and capital inflows into Singapore.
OCBC’s Ling said the main risks still revolve around tariffs and geopolitics, noting that sectoral tariffs may adversely impact 2026 growth prospects.
“But conversely, if they do not materialise, there could be possible upside risk too,” she added.
Monetary policy
Some 42 per cent of respondents now expect MAS to ease monetary policy settings at next month’s review, up from less than a fifth in the previous survey.
Nearly 37 per cent believe this will involve flattening the slope of the Singapore dollar nominal effective exchange rate policy band, with the others expecting the slope to be reduced but not flattened.
But expectations for the following January meeting remain unchanged, with nearly all respondents seeing no monetary policy shift then.
