August 19, 2025
SINGAPORE – Singapore’s economy remains resilient despite US tariff uncertainties, thanks to the nation’s core strengths in job creation, infrastructure and housing, economists said after Prime Minister Lawrence Wong’s National Day Rally on Aug 17.
While no new handouts were announced, PM Wong has set out a strategy focused on equipping workers with new skills, helping businesses adopt technology, renewing the living environment and ensuring affordable housing for future generations – priorities that economists said play to Singapore’s long-term strengths.
“PM Wong’s second National Day Rally speech charted a forward-looking vision for Singapore and its citizens: One filled with hope, possibilities and opportunities, yet firmly grounded in realism and caution. The short- to medium-term challenges are immense, particularly on the economic front,” said Mr Suan Teck Kin, head of research at UOB.
Artificial intelligence (AI) will continue to disrupt the economy, hence the usual mantra of reskilling, upskilling and lifelong learning remains valid, he said.
“The core message is, how will Singapore not only survive, but thrive in this unknown world.”
The immediate priorities are safeguarding jobs and securing Singapore’s interests through international business deals, Mr Suan said.
In the medium term, he added, the focus should be on helping all segments of society harness innovation and technology to lift productivity and create new value across the economy.
Maybank economist Chua Hak Bin said Singapore’s economy has so far been absorbing the shocks from US tariffs. However, it remains vulnerable if the levies are hiked further and US-China rivalry intensifies.
“PM Wong is preparing Singaporeans for the risks and uncertainty from a more fragmented world,” Dr Chua said.
A 1 per cent slide in global growth could shave about 0.7 percentage point off Singapore’s gross domestic product (GDP) growth, he said.
Dr Chua said new government-funded job matching schemes will strengthen the labour market by helping fresh graduates secure traineeships aligned with their skills and fields.
The Government is leveraging the Johor Bahru-Singapore Rapid Transit System (RTS) and Johor-Singapore Special Economic Zone (JSSEZ) to develop and invest in the northern region of the Republic.
Flexible industrial spaces will be built around the RTS Link station in Woodlands North to support businesses taking advantage of the JSSEZ, in addition to new homes in nearby Kranji and Sembawang.
“The step-up in infrastructure and construction spending will help cushion the economy from any global trade slowdown. More broadly, developing the north and coastal protection infrastructure will sustain Singapore’s ongoing construction boom until the end of the decade,” Dr Chua said.
Maybank is keeping its 2025 GDP growth forecast for Singapore at 3.2 per cent, which is higher than the Ministry of Trade and Industry’s revised forecast range of 1.5 per cent to 2.5 per cent.
DBS Bank economist Chua Han Teng said the direct impact of the US tariffs will be limited, but Singapore’s exports and economy could suffer indirect hits in the second half of 2025 and beyond through its trade linkages with key partners.
While the US has lowered its tariffs for several countries, the levies are still mostly in the range of 10 per cent to 30 per cent, and are the highest US tariffs in nearly a century, PM Wong had said. For China, the tariffs on many goods still remain above 50 per cent.
DBS’ Mr Chua expects these ongoing tariff uncertainties will continue to weigh on business sentiment, resulting in firms hesitating over future investment and hiring plans.
Eventually, activities in the trade-related manufacturing, wholesale trade, as well as transport and storage sectors will moderate, bearing the brunt of the overall weakness, he said.
Given the more protectionist global landscape and ageing demographics, AI can boost productivity by accelerating business processes, enhancing efficiency and allowing a focus on higher value-added activities, the DBS economist said.
He sees significant room for companies in Singapore to widely adopt AI in the coming years, noting that only 4.2 per cent of the small and medium-sized enterprises here used AI in 2023.
He also welcomed the three targeted employment and reskilling measures aimed at easing job security concerns: a government-funded traineeship scheme for fresh graduates, a community development council-level job-matching scheme, and enhancements to the SkillsFuture Level-Up Programme for mid-career workers.
The traineeship scheme will support a broad spectrum of Institute of Technical Education, polytechnic and university graduates. This should help the graduates embark on the first steps in their careers to gain experience and relevance in order to secure future full-time positions, Mr Chua said.
PM Wong said that if the economy worsens, the traineeship programme will be scaled up.
“We think that this fresh graduate support would be akin to the SGUnited Traineeships programme adopted during the Covid-19 pandemic, with room to tweak various criteria such as duration, government co-funding and stipend amount,” Mr Chua said.
The DBS economist said the enhancements to the SkillsFuture Level Up Programme – introduced in 2024 – will reinforce the importance of enhancing human capital.
Two enhancements were announced: First, to allow a portion of the training allowances to be claimed for part-time courses; and second, to expand the course offerings.
“These efforts would likely support mid-career and mature workers, who face downside pressures in re-entering the labour market six months post-retrenchment, to keep up with evolving employer needs,” Mr Chua said.
Read more: Key announcements from PM Wong’s first National Day Rally