The trade ministry said it sees the export-driven economy growing 2.0-3.0% this year, compared with a previous projection of 1.0-3.0 %.

It grew 1.1% last year and 3.8% in 2022.

The city-state’s economic performance is often seen as a barometer of the global environment because of its reliance on international trade.

It grew 2.9% on-year in April-June, trade ministry data showed Tuesday, better than the 2.7% estimated and following the 3.0% expansion seen in the previous three months.

Among key export markets, the ministry said demand from the US was seen easing gradually on slowing consumption, while China’s economy is forecast to “expand at a slightly slower pace” in the second half.

However, growth in the eurozone was forecast to improve, while key Southeast Asian economies are tipped to pick up slightly.

“On balance, Singapore’s external demand outlook is expected to be resilient for the rest of the year,” the trade ministry said.

It also noted possible headwinds including the potential “intensification of geopolitical and trade conflicts” and tighter financial conditions that could “trigger market volatility or latent vulnerabilities in banking and financial systems”.

Manufacturing, a key economic pillar, contracted 1.0% on-year in the second quarter, hit by weak output in pharmaceuticals.

However, that was narrower than the 1.7% shrinkage in the first quarter.