SINGAPORE: Singapore has lowered its 2025 economic growth forecast to a range of 0.0 to 2.0 per cent, citing the impact of new United States (US) tariffs on global trade and the economy, as well as the country’s first-quarter performance.
The Ministry of Trade and Industry (MTI) had previously projected growth of between 1.0 and 3.0 per cent.
MTI said sweeping US tariffs and the prolonged trade tensions with China were expected to weigh heavily on global trade and economic activity.
"The growth outlook of economies in our region will be negatively affected by a fall in external demand, partly due to the tariffs’ wider impact on global trade and growth.
"Business and consumer sentiment will also be dampened, thereby crimping domestic consumption and investment in many economies,” it said in a statement today.
MTI said the situation will continue to evolve as the US and other economies weigh their moves amid heightened market volatility. Consequently, there are substantial downside risks to the global economy.
It added that the spike in uncertainty may lead to a larger-than-expected pullback in economic activity as businesses and households adopt a "wait-and-see” approach before making spending decisions.
Meanwhile, further tariff measures, including retaliatory tariffs, could lead to a full-blown global trade war, which would upend global supply chains, raise costs, and result in a far sharper global economic slowdown.
MTI also flagged risks to financial stability, noting that disruptions to the global disinflation process and rising recession threats in both advanced and emerging markets could prompt destabilising capital flows, exposing vulnerabilities in banking and financial systems.
"Against this backdrop, MTI’s assessment is that the external demand outlook for Singapore for the rest of the year has weakened significantly. This has led to a deterioration in the outlook for outward-oriented sectors in Singapore,” it said.
The manufacturing sector, in particular, is expected to be hit by softer global demand.
Given the significant downside risks, MTI said it would continue to monitor global and domestic developments closely and adjust the growth forecast if necessary.
Meanwhile, MTI said that, based on advance estimates, the country’s economy grew by 3.8 per cent year-on-year in the first quarter of 2025, slower than the 5.0 per cent growth in the previous quarter.
On a quarter-on-quarter, seasonally adjusted basis, the economy contracted by 0.8 per cent, a reversal from the 0.5 per cent expansion in the fourth quarter of 2024.
"This was due to sequential declines in manufacturing and some outward-oriented services sectors, such as finance and insurance, in tandem with slowing external demand,” it said. - Bernama
