Singapore growth tops forecasts as factories lift second-quarter GDP

Singapore’s economy grew faster than expected in the second quarter, giving investors another data point before the country’s central bank sets policy later this month. The 5.7% expansion points to strength in manufacturing, while softer services growth kept the overall number below the first quarter’s pace.

The Ministry of Trade and Industry said Singapore’s gross domestic product grew 5.7% in the second quarter. Gross domestic product, or GDP, is the broadest measure of economic output, covering the value of goods and services produced in an economy.

The figure beat the 5.5% expected by economists surveyed by Reuters. It was still lower than the revised 6.3% growth recorded in the first quarter.

Manufacturing did the heavy lifting

According to the Ministry of Trade and Industry, manufacturing was the main support for growth in the quarter. Services, a major part of Singapore’s economy, slowed and reduced the overall lift from factories.

That split matters for investors because Singapore is a trade-heavy economy. Factory strength can reflect demand for goods tied to global supply chains, while services can be more sensitive to tourism, finance, retail and local consumption trends.

The GDP release lands ahead of the Monetary Authority of Singapore’s next quarterly policy decision. Singapore handles monetary policy differently from central banks such as the U.S. Federal Reserve, which usually move short-term interest rates.

The MAS instead manages policy through the exchange rate. It influences the Singapore dollar against a basket of currencies from key trading partners, using an undisclosed trading band known as the Singapore dollar nominal effective exchange rate, or S$NEER.

In plain English, a stronger Singapore dollar can help reduce imported inflation by making foreign goods cheaper in local currency terms. A weaker currency can support exporters by making their goods more competitive abroad, though it can also add pressure to import costs.

Inflation and geopolitical risks stay in view

After the GDP data, the Singapore dollar traded at 1.294 against the U.S. dollar, slightly weaker, according to the market data cited in the report.

Inflation remains part of the policy backdrop. Singapore’s inflation rate held at 1.8% in May, its joint-highest level since September 2024. In its consumer price index release, the MAS said global energy prices remain high compared with 2025 and projected full-year inflation of 1.5% to 2.5%.

The Ministry of Trade and Industry said in May that it expected Singapore’s economy to grow 2% to 4% in 2026. The ministry also said “downside risks have risen significantly as a result of the US-Israel-Iran conflict.”

For investors, the next signal is likely to come from the MAS. The stronger-than-expected GDP number gives policymakers evidence that growth has held up, while steady inflation and external risks give them reasons to stay cautious.

This story draws on original reporting from CNBC.