June 19, 2025
SINGAPORE – Private sector economists lowered their 2025 economic growth projection for Singapore by nearly a percentage point, in a nod to the risks that US tariffs pose to the Republic’s export-driven economy.
The growth forecast of 1.7 per cent released on June 18 was a drop from the 2.6 per cent figure projected in the March quarterly survey of professional forecasters by the Monetary Authority of Singapore (MAS).
The downgrade shows increased conviction among economists that Singapore’s economy will slow quite sharply from the 4.4 per cent growth clocked in 2024.
The latest forecast is also shy of the higher end of the zero per cent to 2 per cent range projected by the Ministry of Trade and Industry (MTI) in April.
MTI’s growth estimate came days after US President Donald Trump announced an unprecedented “reciprocal tariffs” policy that threatens to impose duties on almost all exports to the world’s largest economy.
The economists in the MAS survey cited geopolitical and trade tensions as the foremost downside risk to Singapore’s outlook, followed by the threat of a global slowdown.
They also flagged tighter financial conditions, which usually refer to higher borrowing costs and financial market volatility.
The economists also see Singapore’s growth stuck at 1.7 per cent in 2026, suggesting they expect no meaningful economic rebound next year.
The survey was sent out to economists on May 22, soon after the US and China struck a preliminary deal on May 12 that led to a drop in tariffs from both sides and a 90-day suspension of levies announced earlier in April.
Hence, on potential upside risks to Singapore’s economic outlook, most economists cited milder-than-expected or easing of trade tensions. Respondents also pointed to the possibility of better-than-expected economic growth for Singapore’s trading partners – including China and the US – and a sustained global upturn in demand for electronic goods.
Analysts said that with higher reciprocal tariffs on pause for now, the Republic’s trade-related sectors – such as manufacturing and wholesale trade – will likely remain steady. However, once the timeout ends, these sectors will be hit.
DBS Bank senior economist Chua Han Teng said: “Singapore’s external-oriented economy faces heightened uncertainties and downside risks from the tariff chaos.
“We foresee softer real GDP (gross domestic product) growth in the second half of 2025, due to high trade frictions and weaker business sentiment.”
He added that he expects Singapore’s GDP growth to cool to 2 per cent in full-year 2025.
In the MAS survey, inflation in Singapore was seen as easing further in 2025.
The median forecast for all-items inflation for 2025 was at 0.9 per cent, down from 1.7 per cent in the March survey. The median forecast for MAS core inflation – which excludes private transport and accommodation costs – was 0.8 per cent, also lower than 1.5 per cent in the previous survey.
However, the economists see unemployment edging up. They expect the unemployment rate to end 2025 at 2.2 per cent, higher than the 2 per cent they predicted in the March survey.
On monetary policy, more than half of the respondents, or 57.9 per cent, expected further easing in the pace of the Singapore dollar’s appreciation in MAS’ next policy review due in July.
Most central banks use interest rates to manage their monetary policy, which is aimed at managing inflation. MAS, however, uses the exchange rate, as the bulk of inflation in Singapore is driven by the prices of imported goods and services.
MAS does not directly set the precise level of the exchange rate. Instead, it manages the value of the Singapore dollar within a policy band against a trade-weighted basket of currencies of its trade partners – referred to as the Singapore dollar nominal effective exchange rate, or S$Neer.
The survey showed that 47.4 per cent of respondents expect MAS to flatten the slope of the S$Neer policy band.
The slope represents the change in the pace of S$Neer appreciation over time. A reduced pace would mean slower appreciation, and a flat slope would mean no appreciation of the currency.
MAS can also strengthen or weaken the S$Neer immediately by shifting the midpoint of the policy band. A lower midpoint would mean slower appreciation.