Singapore’s economy delivered a surprisingly strong first half of 2025, prompting the Ministry of Trade and Industry (MTI) to upgrade its full-year growth forecast. The forecast for 2025 was lifted to a range of 1.5% to 2.5% up from the previous 0% to 2% band. In the second quarter alone, the year-on-year real GDP grew by 4.4% up from about 4.1% in the first quarter. In this article, we explore the key sectors in Singapore, how they performed, and future predictions.
Manufacturing With a 5.2% Gain
The manufacturing sector in Singapore grew 5.2% year on year in Q2 of 2025, up from 4.7% in Q1. This acceleration signals that production is strengthening in different areas and is attracting a variety of investors to use platforms like TradingView Singapore.
The precision engineering cluster expanded by about 10.3% in Q2, driven by a higher output of machinery and systems and precision modules. The electronics cluster grew by about 6.6%, with the output of communications technology and consumer electronics jumping to 34.9%.
The transport engineering cluster also surged by 18.8%, supported by a strong aerospace segment. These numbers show that Singapore’s manufacturing base is benefiting from both global demand for high-value components and regional supply-chain repositioning.
Part of the surge in the transport engineering cluster stems from a deliberate shift in global supply-chain architecture, as major aerospace firms are expanding their high-precision component manufacturing into Singapore as a strategic alternative to over-reliance on China.
For instance, Collins Aerospace is investing $250 million to move its Singapore operations into a new facility at Seletar Aerospace Park. This means Singapore is now being seen as a stable node for critical aerospace parts manufacturing, and that explains the industry’s 18.8% growth.
But there’s a downside. On a quarter-on-quarter season-adjusted basis, manufacturing shrank by 0.4% in Q2. Although the year-on-year growth is healthy, there are short-term softness signals. But the uptick in clusters still suggests that the sector is shifting toward more resilient and higher-value segments, such as precision engineering and transport engineering.
Construction Sees a 6.0% Growth
Turning to the domestic side of the economy in Singapore, the construction sector in Q2 2026 grew by 6.0% year-on-year, accelerating from 4.9% in Q1. Certified progress payments rose by about 10.3% year-on-year in Q2. Growth was also supported by public and private sectors, because public institutional, civil engineering, and building projects experienced major growth.
On a quarter-on-quarter basis, it returned to growth of 5.7% in Q2 despite a contraction of 2.0% in Q1. This suggests that Singapore’s economy isn’t solely dependent on manufacturing and trade, which are external factors, but also has reliable internal demand momentum through infrastructure and construction investment.
For policymakers, this reliability provides a buffer against external shocks. When global headwinds hit trade or manufacturing, domestic investment can help smooth the path. For businesses and investors, investing in construction materials, building services, and infrastructure engineering offers resilience.
Financial and Insurance Sectors Pull Their Weight
While manufacturing and construction dominate the headlines, the services sector, especially finance and insurance, also contributed meaningfully to the stronger first half. In Q2 2025, the finance and insurance sector grew by 4.2% year-on-year, up from 4.1% in Q1.
Within the sector, the insurance and other auxiliary financial services, like payment services and cross-border transactions, posted stronger growth. Meanwhile, banking and fund management segments saw moderate growth, and net fees and commissions weakened slightly.
The payments and auxiliary segment, in particular, has also picked up thanks to the increased cross-border trade flows and global transaction activity. This sector is important to Singapore’s economic outlook because it brings diversity.
The city-state’s position as a global financial hub means that services-led growth helps diversify away from purely manufacturing-oriented and trade-oriented cycles. Stronger finance and insurance growth show that Singapore is taking advantage of its regional role in payments, insurance, banking, and capital flows.
Why the Growth Forecast Matters and What Lies Ahead
The upgrade of Singapore’s growth forecast to 1.5% for 2025 sends a signal. While the pace isn’t quick, it is resilient and better than many had expected given the current uncertainties. Some of the key implications of the new growth forecast include:
- Resilience in key sectors: Manufacturing at 5.2% growth, construction at 6.0% and finance and insurance at 4.2% are all numbers that give substance to the growth story.
- Different drivers: Growth is being supported by a mix of export-oriented manufacturing, domestic investment in construction, and services-led momentum in finance and insurance. This gives Singapore a hedge against over-reliance on any single sector.
- Cautious optimism: While the first half was strong, authorities are warning that exports might fade because of tariffs, and global growth risks will remain. MTI flagged that most of the export strength was due to front-loading activity.
- Opportunities and vulnerabilities: The strong manufacturing clusters point to Singapore’s high-value manufacturing pivot. Meanwhile, construction growth suggests that domestic demand is holding up. But slower areas could drag.
- Policy implications: The stronger sectors give the authorities room to steer policy, but they must remain alert to external risks and domestic headwinds.
Singapore Sees High Growth Ahead of 2025
Singapore’s upgraded growth forecast for 2025 reflects a mix of global-facing and domestic supporting sectors working in harmony. For businesses, investors, and policymakers, the message is clear. Although Singapore isn’t immune to global ups and downs, it’s showing adaptability and has reliable growth drivers.
