The Monetary Authority of Singapore (MAS) is anticipated to release its Monetary Policy Statement (MPS) on 14 April 2025, amidst rising global trade tensions.
According to UOB Global Economics and Markets Research, Singapore’s economy is particularly vulnerable to these tensions, given its significant domestic value added in foreign demand, which exceeds 60% of its nominal GDP.
Recent trade developments, including US tariffs and retaliatory measures from China and the European Union, have heightened the risk of a global economic slowdown. UOB has revised Singapore’s full-year growth forecast for 2025 down to 1.5% from a previous 2.5%, with further adjustments expected following the release of the first quarter GDP estimates.
Prime Minister Lawrence Wong has indicated that the Ministry of Trade and Industry (MTI) may lower its growth forecast for 2025, currently set at 1.0-3.0%. Wong emphasised Singapore’s readiness to implement fiscal measures, such as cash handouts or job support schemes, should global and domestic growth sharply decline.
UOB’s analysis suggests a 60% probability that MAS will slightly reduce the Singapore dollar nominal effective exchange rate (S$NEER) slope by 50 basis points to 0.5% per annum in the upcoming MPS. This could be followed by a further adjustment to a zero percent appreciation stance later in the year. The report also highlights potential deflationary risks due to weakened global demand.
As Singapore navigates these challenges, the focus remains on maintaining fiscal prudence, with an accumulated fiscal surplus of approximately S$14 billion recorded from FY21 to FY25. The upcoming MAS policy decision will be closely watched for its implications on Singapore’s economic resilience in the face of global uncertainties.
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