Singapore 2025: Slower Growth, Stronger Opportunities?

Singapore’s economy may not be racing in 2025, but it is on a stronger path than expected. The Monetary Authority of Singapore’s (MAS) latest survey of professional forecasters shows private-sector economists now project full-year growth at 2.4%, up from the 1.7% predicted a few months ago. This is close to the upper end of the official forecast range of 1.5% to 2.5% set by the Ministry of Trade and Industry.

The upgrade reflects stronger-than-expected second-quarter growth of 4.4%. This growth comes from solid performance in manufacturing, construction, wholesale and retail trade, and exports. Singapore’s export-focused sectors are driving the economy. In particular, demand for electronics, especially related to AI investment, stands out.

While the growth outlook has improved, expectations for inflation and unemployment remain steady. Headline inflation is projected at 0.9%, and unemployment at 2.2% for the year. MAS is also likely to take a more supportive approach, with 42% of economists expecting policy easing in October to maintain momentum.

What’s happening on the ground?

Exports and manufacturing lead the charge

Singapore’s non-oil domestic exports are now expected to grow by 2.2% in 2025, an increase from the previous prediction of 1%. Manufacturing, once thought to be declining, is now expected to grow by 0.8%. Construction is set to rise by 4.7%, while wholesale and retail trade is projected to increase by 2.9%. These changes show that external demand and regional trade flows are helping Singapore perform better despite global uncertainty.

Inflation is calming

Inflation pressures have eased compared to 2023 and 2024. With headline inflation below 1% and core inflation around 0.7%, the impact of rising costs has lessened, offering businesses and households some relief.

MAS is loosening where prudent

Instead of making sudden changes, MAS is expected to fine-tune monetary policy, potentially flattening the slope of the Singapore dollar nominal effective exchange rate band. This aims to keep inflation in check while supporting growth.

Why this matters to you (and your portfolio or business)

Sector shifts deserve attention

Export-oriented sectors like electronics, precision engineering, and regional trade services may continue to thrive. In contrast, accommodation and food services,which face lowered expectations of 0.5% growth, might encounter challenges.

Balance matters more than ever

Returns won’t solely come from bold bets. A mix of growth exposure and safer assets, including quality income-generating investments or inflation hedges,can stabilise portfolios.

Policy changes may be subtle but meaningful

Minor adjustments in MAS policy can impact interest rates, liquidity, and borrowing costs. Staying aware of these changes will be crucial.

Clarity and agility are essential

In this moderate-growth environment, flexibility is key. Both businesses and individuals should test their plans and get ready to respond to risks and opportunities.

What you can do now

• Revisit your financial goalswith this tempered growth outlook in mind.
• Tilt exposures toward exports and manufacturing-linked sectors that are benefiting from global trade shifts.
• Shield your downsideby focusing on capital preservation, quality assets, and strategic hedges.
• Stay tuned to MAS and data releases for early signals of shifts in monetary policy.
• Engage with advisors who can help you pivot strategies in line with the changing macro backdrop.

2025 might not be a year of high growth, but it could offer wise positioning and stronger opportunities. By aligning strategies with Singapore’s changing economic landscape, individuals and businesses can navigate risks and seize benefits.

Disclaimer:‍‍‍‍‍‍ Investment carries certain risks. You should not just rely on results as an indication of your financial needs. You should understand and familiarise yourself with any investment and the associated risks before investing. You are also recommended to seek professional advice before making any decision to buy, sell or hold any investment or insurance product. The views and thoughts expressed in the post belong solely to us, and not to Manulife Financial Advisers Pte Ltd, or any other group of individuals.