Singapore’s economy grew by 4.4% in the second quarter compared to last year, which is a bit higher than the expected 4.3%. There was also a 1.4% increase from the previous quarter, following a 0.5% drop in Q1. The Ministry of Trade and Industry has updated its forecast for GDP growth in 2025 to a range of 1.5% to 2.5%. This is an improvement from the earlier estimate of 0.0% to 2.0% and reflects stronger-than-expected performance in the first half of the year.

Non-Oil Export Growth Projections

Non-oil domestic exports are expected to rise by 1.0% to 3.0% this year, although future predictions are uncertain. Officials have warned that risks may lean toward slower growth in the second half of 2025 compared to earlier months. The 4.4% growth in the second quarter is promising, especially after the contraction seen in the first quarter. This positive news could give a temporary boost to the market. Short-term sentiment appears optimistic based on these past figures. However, we should approach the revised GDP growth forecast of 1.5% to 2.5% with caution. The government has cautioned that growth may slow in the latter half of 2025, creating a mismatch between recent strong performance and a potentially weaker future. This uncertainty may pressure the Singapore dollar, which has been trading around the 1.34 level against the US dollar. With the Monetary Authority of Singapore maintaining its policies in recent reviews, traders might look for strategies that could benefit from a weaker SGD if the predicted slowdown occurs. A slowing economy typically makes central banks less eager to support a stronger currency.

Stock Market Implications

In the stock market, the Straits Times Index has climbed toward the 3,450 mark due to this good news. However, given the warnings about potential risks, buying put options on an STI-tracking ETF could be a wise approach to protect existing long positions. This strategy acts like insurance against the expected slowdown. The official outlook emphasizes “uncertainty,” which usually leads to market volatility. In such situations, strategies that profit from significant price swings are effective. One option is using strangles, which involve buying both call and put options at different prices to benefit from large market movements. Historically, Singapore’s economy has followed similar patterns. For example, after the 2008 financial crisis, growth slowed in the subsequent years. This historical context reinforces the warnings that the recent growth might not continue into the end of 2025. Create your live VT Markets account and start trading now.

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