Singapore’s economy experienced a slowdown in the first quarter of 2025, with GDP growth declining to 3.8% year-on-year, down from 5.0% in the previous quarter, according to advance estimates released by the Ministry of Trade & Industry. This figure fell short of the Bloomberg consensus forecast of 4.5%, highlighting a deceleration in economic momentum.
The manufacturing sector, a significant contributor to the economy, saw its growth rate decrease from 7.4% to 5.0% year-on-year. The services sector, particularly retail trade, also faced challenges due to weakening external demand. Despite this, all major sectors, including wholesale and retail trade, and transportation and storage, recorded positive growth of 4.2% year-on-year.
“The intensifying trade tensions between the US and China — characterised by escalating tit-for-tat tariff measures — are expected to spill over more broadly into the global economy, especially given China’s pivotal role in global supply chains. MAS has echoed similar concerns in its latest policy statement, noting that the external environment remains highly uncertain,” according to CGS International’s Economic Update for Singapore.
In response to the dimming economic outlook, the Monetary Authority of Singapore (MAS) announced a reduction in the rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band on 14 April 2025. This unexpected move reflects MAS’s concerns over the global growth outlook, exacerbated by recent tariff measures introduced by US President Trump, which are impacting Singapore’s export-dependent sectors.
The ongoing trade tensions between the US and China, marked by escalating tariffs, pose a significant threat to Singapore’s economy. The Singapore government has revised its GDP growth forecast for 2025 to a range of 0.0-2.0% year-on-year, down from the previous estimate of 1.0-3.0%.
The MAS has also adjusted its core inflation forecast to 0.5-1.0%, anticipating subdued inflationary pressures in the current economic climate. CGS International expects inflation to remain subdued at 1.7% through 2025.
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