SINGAPORE, Aug 12, 2025 (BSS/AFP) - Singapore on Tuesday raised its 2025 economic growth forecast, but warned the outlook for the rest of the year remains clouded by global uncertainty, in part due to US tariffs.

Southeast Asia's second-largest economy is heavily reliant on international trade and is vulnerable to any global slowdown induced by the tariffs, even only facing a baseline 10 percent levy from US President Donald Trump.

The city-state's trade ministry lifted its gross domestic product (GDP) growth forecast to 1.5-2.5 percent from an earlier range of 0-2.0 percent.

"This largely reflects the better-than-expected performance of the Singapore economy in the first half of 2025," the ministry said in a statement.

"However, the economic outlook for the rest of the year remains clouded by uncertainty, with the risks tilted to the downside."

This comes after the economy grew 4.4 percent year-on-year in the second quarter, having expanded 4.1 percent in the previous three quarters.

The ministry cautioned that the global outlook remained fragile, citing the "continued unpredictability" of US trade policies, including the timing and extent of the sectoral tariffs on pharmaceutical products and semiconductors -- both key exports for Singapore.

Trump last week announced a 100 percent tariff on chips from firms that do not invest in the United States, and threatened levy of up to 250 percent on pharmaceutical imports.

Singapore's economic growth is expected to slow in the second half of the year compared with the first half, its trade ministry added.

"In particular, the pace of growth in the manufacturing sector is projected to weaken in the coming quarters as the US tariff measures weigh on demand in global end-markets," it said.

The wholesale trade sector is similarly expected to cool as front-loading activities in the region wane and global trade softens, while a drag on the demand for shipping and air cargo services could affect the transportation and storage sectors.

The trade ministry said it will "continue to monitor developments in the global and domestic economies closely, and make adjustments to the forecast if necessary over the course of the year".