Still, MTI cautioned that the global economic outlook “remains clouded by significant uncertainty”.
This includes elevated economic uncertainty which may lead to a larger-than-expected pullback in economic activity as businesses and households adopt a “wait-and-see” approach before making spending decisions.
There is also the risk of a re-escalation in tariff actions, including retaliatory tariffs, that could lead to a full-blown global trade war, it warned.
Against this backdrop, the growth of outward-oriented sectors in Singapore is expected to slow over the course of the year.
US’ tariff measures are likely to “adversely affect” the manufacturing sector given its export exposure to the US market, as well as slowing growth in global end-markets. That said, the transport engineering cluster within the sector “remains a bright spot”, especially given the shift towards aircraft maintenance, repair and overhaul works.
MTI said the manufacturing sector’s slowdown, coupled with weaker global trade, will in turn weigh on the trade-related services sectors.
In the wholesale trade sector, sales volumes are expected to weaken as the boost from front-loading activities fades and global trade softens, especially in the second half of 2025.
The projected decline in global trade will similarly negatively affect the transportation and storage sector through a softer demand for shipping and air cargo services.
Meanwhile, growth in the finance and insurance sector could be weighed down by episodes of weaker trading activity, as well as more tepid business activity and lower consumer spending.
The information and communications and professional services sectors could also see muted growth if firms cut back on discretionary spending, such as IT and marketing.
Growth in the consumer-facing sectors, such as retail trade and food and beverage services, is likely to remain lacklustre as locals continue to spend abroad and the expected weakening of domestic labour market conditions.
