In the second quarter, Singapore's economy expanded by 5.7%, exceeding the 5.5% forecast from economists surveyed by Reuters, but down from a revised 6.3% growth in the first quarter. The manufacturing sector showed remarkable growth of 10.4%, up from 8.4% in the previous quarter, while the services sector experienced a slowdown, growing only 4.6% compared to 6.2% in the first quarter.
This economic data is particularly relevant as the Monetary Authority of Singapore (MAS) is set to announce its monetary policy later this month. Unlike many countries that adjust interest rates, Singapore manages its monetary policy by influencing the value of the Singapore dollar against its trading partners' currencies through the S$NEER mechanism.
Following the GDP release, the Singapore dollar traded at 1.294 against the US dollar, showing a slight depreciation. Additionally, inflation in Singapore remained steady at 1.8% in May, the highest level since September 2024, with the MAS projecting full-year inflation to be between 1.5% and 2.5%.
The Ministry of Trade and Industry has also indicated that GDP growth for 2026 is expected to be between 2% and 4%, although they noted increased downside risks due to geopolitical tensions, particularly the US-Israel-Iran conflict