Singapore GDP grows 5.7% in second quarter as factories lead

Singapore’s economy grew 5.7% in the second quarter from a year earlier, according to the Ministry of Trade and Industry, exceeding the 5.5% forecast from economists surveyed by Reuters. The expansion was slower than the revised 6.3% pace recorded in the first quarter, with manufacturing providing the main lift while services growth cooled.

The figures give policymakers a firmer read on domestic momentum before the Monetary Authority of Singapore’s quarterly monetary policy decision later this month. For investors and operators, the data point to continued strength in a trade-exposed economy even as inflation, energy costs and geopolitical risks remain part of the policy backdrop.

Manufacturing offsets softer services

The Ministry of Trade and Industry said the second-quarter performance was supported primarily by the manufacturing sector. The release also indicated that slower growth in services limited the overall pace of expansion.

Singapore’s output mix makes the quarterly gross domestic product data relevant beyond the city-state. Its manufacturing base is closely tied to regional supply chains, while its services industries reflect conditions in finance, trade, tourism and logistics. The second-quarter result therefore offers a signal on both external demand and domestic activity, although the ministry’s release did not provide detailed sub-sector figures in the material reported.

The latest annual growth rate remained above the government’s full-year projection range. In May, the Ministry of Trade and Industry maintained its 2026 GDP growth forecast at 2% to 4%, while saying downside risks had risen significantly because of the US-Israel-Iran conflict.

MAS decision comes next

The Monetary Authority of Singapore is due to announce its next policy decision later in July. Unlike central banks that set a short-term interest-rate target as their main instrument, Singapore conducts monetary policy by managing the Singapore dollar against a basket of currencies from its major trading partners.

That framework is known as the Singapore dollar nominal effective exchange rate, or S$NEER. The MAS allows the exchange rate to move within an undisclosed policy band and can adjust the slope, width or centre of that band to influence imported inflation and broader monetary conditions.

After the GDP release, the Singapore dollar traded at 1.294 against the US dollar, marginally weaker, according to the market level reported alongside the data.

Inflation holds near recent high

The growth data follow a May inflation reading of 1.8%, which was unchanged and matched the highest level since September 2024. In its consumer price release, the MAS said global energy prices remained elevated compared with 2025.

The central bank projected full-year inflation of 1.5% to 2.5%, according to that release. The inflation range and the stronger-than-expected second-quarter GDP print frame the policy trade-off for the MAS as it assesses price pressures, the exchange rate and external risks.

The Ministry of Trade and Industry’s earlier warning on geopolitical risks remains relevant for Singapore because of its reliance on trade, energy imports and financial flows. The second-quarter GDP result shows the economy entered that period with stronger growth than analysts had expected, while the moderation from the first quarter indicates that momentum had already eased from the start of the year.

This story draws on original reporting from CNBC.