Singapore’s Q2 GDP growth has been revised upwards to 4.4% year-on-year, slightly higher than the initial estimate of 4.3%, according to Nomura’s latest Asia Insights report. This adjustment aligns with expectations and reflects robust performance in the services and construction sectors. The Ministry of Trade and Industry (MTI) has subsequently raised its 2025 GDP growth forecast range to 1.5-2.5%, up from 0.0-2.0%, although it cautions about potential risks in the second half of the year.
The revision in GDP growth was primarily driven by the services sector, which saw an increase to 4.3% from 4.1%, and the construction sector, which improved to 6.0% from 4.9%. These gains offset a slight decline in manufacturing growth, which was adjusted down to 5.2% from 5.5%. The domestically-oriented sectors, including construction and real estate, showed resilience with a growth of 4.2% in Q2, up from 3.1% in Q1.
On the demand side, domestic consumption contributed significantly to GDP growth, with government consumption rising sharply by 6.7% year-on-year. Private consumption also saw an increase, supported by a strong labour market. However, the MTI remains cautious, highlighting uncertainties such as potential trade policy shifts from the US and geopolitical tensions.
Nomura maintains its 2025 GDP growth forecast at 2.6%, above the consensus of 1.8%, anticipating a slowdown in H2 due to export payback effects. Despite the cautious outlook, Nomura suggests that fiscal support measures expected in Q3 could mitigate some of the risks, particularly in the labour market.
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