Singapore’s gross domestic product (GDP) grew by 3.9% in the first quarter of 2025 compared to the same period last year, according to the Ministry of Trade and Industry. This growth surpassed the median forecast of 3.6% and the government’s earlier estimate of 3.8%.

On a seasonally adjusted quarterly basis, the GDP contracted by 0.6%, which was better than the expected 1% decline. The growth was boosted by increased activity in manufacturing and wholesale trade, as businesses prepared for possible US tariff increases.

The Ministry of Trade and Industry maintained its full-year GDP growth forecast at 0% to 2%. This outlook reflects ongoing uncertainty in the global economy, largely due to US-China trade tensions.

Despite a 90-day truce that temporarily eased tariffs, risks of renewed tensions and a global economic slowdown persist.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Singapore’s experience with trade tensions informs cautious outlook

Singapore’s modest 0-2% growth forecast for 2025 reflects historical lessons from previous trade tensions, where initial growth was followed by significant contractions.

During the 2019 US-China trade conflict, Singapore experienced its worst quarterly performance in seven years with a 3.3% economic contraction in Q2, after growing 3.8% in Q1 1.

This pattern of front-loading followed by contraction explains why officials remain cautious despite Q1’s 3.9% growth, as Prime Minister Lawrence Wong warned that “a recession can’t be ruled out.”

Non-oil exports plunged by 15.9% in May 2019 during previous trade tensions, demonstrating Singapore’s acute vulnerability to trade disruptions given its position as a trade hub 2.

The manufacturing sector, currently boosted by pre-tariff activities, previously shrank by 3.1% during similar trade tensions, showing how quickly conditions can reverse 1.

2️⃣ “Front-loading” creates temporary economic boosts ahead of tariffs

The current growth spike driven by businesses “front-loading activities ahead of anticipated US tariff hikes” follows a documented pattern in global trade disputes.

This phenomenon creates artificial demand surges as companies rush shipments before tariff implementation dates, temporarily inflating manufacturing and trade figures 3.

The Ministry of Trade and Industry explicitly acknowledged this effect, noting growth in manufacturing and wholesale trade sectors were “likely to have been partly supported by front-loading activities.”