SINGAPORE - Singapore's Ministry of Trade and Industry (MTI) on Monday revised down its full-year GDP growth forecast for 2025 for the country to a range of 0.0 to 2.0 percent, citing the far-reaching impact of sweeping US tariffs on global trade and economic activity.
The previous forecast projected growth of between 1.0 and 3.0 percent.
In a statement, the ministry said the regional economic outlook will be weakened by falling external demand, in part due to the broader repercussions of the tariffs on global trade flows and growth. "Business and consumer sentiments will also be dampened, thereby crimping domestic consumption and investments in many economies," it noted.
For Singapore, the MTI assessed that the external demand outlook has "weakened significantly" for the rest of the year, negatively affecting the outlook for outward-oriented sectors. The manufacturing sector is expected to be particularly impacted by slowing global demand. This, along with weakening global trade, will likely weigh on the performance of the wholesale trade sector.
Similarly, the transportation and storage sector is projected to face headwinds, as reduced global trade volumes drag down demand for shipping and air cargo services.
The finance and insurance sector could also see softer performance. Weaker trading activity amid heightened risk-off sentiment may depress net fees and commission income across banking, fund management, foreign exchange, and securities trading.
In addition, the uncertain economic environment is likely to dampen firms' capital investment plans and constrain credit intermediation activity.
Payments firms may also experience slower growth, in tandem with subdued business activity and weaker consumer spending, the MTI added.
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The Monetary Authority of Singapore (MAS) announced on Monday that it will slightly reduce the pace of the Singapore dollar's appreciation in response to a weakening external economic outlook.
The MAS said it will maintain its policy stance of a modest and gradual appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band. However, the rate of appreciation will be "reduced slightly." There will be no change to the width of the band or the level at which it is centered.
The decision follows the MAS's assessment that, amid a weakening global environment, Singapore's output gap is expected to turn negative.
"Consequently, imported and domestic cost pressures will remain low, and MAS Core Inflation is forecast to stay well below 2 percent. The risks to inflation are tilted towards the downside," the central bank said in a statement.
This move follows the MAS's earlier decision in January to slightly ease monetary policy, marking its first such shift since 2020.
