Singapore Manufacturing Surges in March, Yet Risks Linger Amid Trade Tensions

Singapore’s manufacturing sector delivered a robust year-on-year rebound in March 2025, with output surging 22.0% compared to the same period in 2024. However, the growth fell short of economists’ expectations of 23.8%, and month-on-month data revealed a mixed picture, underscoring lingering vulnerabilities in an increasingly uncertain global trade environment.

The biomedical manufacturing cluster, particularly pharmaceuticals, was the primary driver of the year-on-year expansion, posting a staggering 60.9% increase. This outperformance, fueled by strong export demand for life sciences products, masked weaker performances in other sectors. Excluding biomedical manufacturing, overall output grew just 6.1% annually—a stark contrast to the cluster’s dominance. Meanwhile, the general manufacturing segment contracted sharply by 13.0% year-on-year, dragged down by declines in beverages, structural metals, and paper products.

The month-on-month data offered a similarly nuanced view. Output rebounded 22.0% in March on a seasonally adjusted basis, reversing February’s 2.0% decline. Yet this gain narrowly missed economists’ 22.6% forecast. The rebound was broad-based, with all segments of the chemicals cluster expanding, contributing to a 6.8% annualized growth in the sector. However, the chemicals cluster’s year-on-year growth slowed to 3.6% from February’s 17.2%, signaling potential supply chain or demand-side challenges.

The transport engineering cluster, a key component of Singapore’s advanced manufacturing, grew 3.7% year-on-year in February but slowed to 3.6% in March, underscoring moderation in global demand for high-tech components.

Sectoral Disparities and External Risks
The data reflects a bifurcated recovery. Biomedical and pharmaceutical sectors, buoyed by global health demands, are thriving, while traditional industries face headwinds. “The biomedical boom is masking deeper structural issues in other sectors,” said analyst Clara Lim of DBS Group Research. “Manufacturers in chemicals and general goods are grappling with weaker export orders, especially from emerging markets.”

Trade tensions remain a critical risk. The potential U.S. tariffs on semiconductors and pharmaceuticals—products central to Singapore’s manufacturing exports—could further dampen growth. “If tariffs materialize, companies in these sectors could see margins compressed or supply chains disrupted,” warned Lim.

The Monetary Authority of Singapore (MAS) remains cautiously optimistic, forecasting full-year GDP growth at the upper end of its 4-6% range. However, the March manufacturing data has already prompted some analysts to trim their first-quarter GDP growth estimates. The advance GDP estimate of 23.5% sequential expansion now faces a potential downward revision from 8.5% annualized to 8.4%, as manufacturing’s outperformance was partially offset by weaker services sectors.

Investment Implications
Investors should focus on sectoral resilience. Biomedical firms, such as Singapore-listed pharma giant Straits Pharmaceuticals (SGX: SPP), are well-positioned to capitalize on global demand for advanced therapies and vaccines. Meanwhile, companies exposed to trade-sensitive sectors like chemicals or semiconductors—such as Chemplast Singapore (SGX: CS) or ST Engineering (SGX: S68)—face heightened risks from U.S. trade policies.

The MAS’s growth forecast hinges on a stable external environment, but geopolitical risks loom large. “Diversification into higher-value, less trade-exposed industries will be critical for long-term stability,” noted Lim.

Conclusion
Singapore’s manufacturing sector demonstrated remarkable resilience in March, with year-on-year growth hitting 22.0%, driven by a biomedical boom. Yet the sector’s uneven recovery—marked by a 13.0% contraction in general manufacturing and slowing growth in chemicals—highlights vulnerabilities. While the MAS’s optimism is justified by the biomedical and electronics sectors’ strength, persistent risks from trade protectionism and supply chain disruptions could test this recovery.

Investors must balance exposure to high-growth biomedical firms with caution toward trade-exposed industries. The first-quarter GDP revision to 8.4% annualized underscores that even a top-tier manufacturing performance cannot offset global headwinds. For Singapore’s economy to sustain its 4-6% growth target, policymakers and businesses must continue to pivot toward innovation and diversification—a challenge as old as it is urgent.