Singapore’s Economic Outlook: Recession Risks Amid Mixed Signals

Singapore’s economy grew by 3.9% year-on-year in Q1 2025, slightly above earlier estimates, prompting some private-sector economists to raise their full-year growth forecasts. However, there remains a split on whether the country will slip into a technical recession.

Despite the positive annual growth, the economy contracted 0.6% on a quarter-on-quarter basis — a reversal from Q4's growth and a potential sign of an impending technical recession, acknowledged as a possibility by the Ministry of Trade and Industry (MTI).

Singapore economy grows in Q1, but recession risks still loom

Key Economic Insights:

• MTI kept its full-year growth forecast between 0% and 2%, citing slightly improved global demand but continued uncertainties, particularly from US-China trade relations.

Sectoral Performance:

• Growth was driven by wholesale trade, manufacturing, and finance sectors.

• On a quarterly basis, manufacturing and wholesale trade saw declines, while construction also contracted.

• Consumer-facing sectors like retail and F&B remained weak due to overseas spending and a softening labour market.

• Some services sectors, such as real estate and transportation, saw accelerated growth.

Forward Outlook

MTI expects a slowdown in export-oriented sectors due to trade tensions and weak global demand. While front-loading may provide short-term boosts, economists warn of a potential downturn in the latter half of the year and into 2026.