Singapore faces economic slowdown amid US tariff impact

[SINGAPORE] Singapore's GDP is expected to decelerate to between 1% and 3% in 2025, down from a strong 4.4% expansion in 2024. This moderation is partly due to rising global trade tensions and the United States' imposition of new tariffs under President Donald Trump.

Impact of U.S. Tariffs on Global Trade

On April 2, President Trump is set to introduce significant tariffs, including a 25% duty on automotive imports and reactivated tariffs on steel and aluminum. These measures are part of what the administration has termed "Liberation Day," aimed at addressing perceived trade imbalances. The tariffs are expected to affect numerous countries, including major economies such as China, the European Union, and Canada. ​

Singapore's Economic Outlook Amid Trade Uncertainties

Singapore, as a heavily trade-dependent nation, is especially vulnerable to global trade disruptions. The Ministry of Trade and Industry (MTI) has maintained its 2025 growth prediction of 1% to 3%, noting uncertainties arising from US trade policy and probable escalation in geopolitical crises. Despite the predicted slowdown, MTI Permanent Secretary Beh Swan Gin has stated that the labor market is solid, with vacancy rates, unemployment levels, and retrenchment data providing no immediate cause for alarm. ​

Sectoral Performance and Future Projections

In 2024, Singapore's manufacturing sector experienced a 7.4% year-on-year growth in the fourth quarter, driven by gains in electronics, transport engineering, and general manufacturing. However, on a quarter-on-quarter seasonally adjusted basis, the sector's growth was flat, indicating potential headwinds ahead. For 2025, the electronics cluster is projected to expand steadily, supported by robust demand for semiconductor chips across various end-markets. Conversely, sectors such as retail trade and food and beverage services may face challenges due to shifts in local spending patterns. ​

Inflation and Monetary Policy Considerations

Inflationary pressures are forecast to lessen, with total inflation falling to 1.9% in 2025, down from 2.5% in 2024. Core inflation, which includes private transportation and hotel expenditures, is expected to fall to 1.8% from 2.8% during the same time period. The Monetary Authority of Singapore (MAS) is expected to maintain its current monetary policy stance, however some economists think that it may ease to assist economic development in the face of global concerns.

Singapore is closely monitoring external changes that may affect its economic trajectory as it navigates the changing global trade scene. While the anticipated slowdown poses challenges, Singapore's solid economic fundamentals and proactive policy measures enable it to successfully respond to these uncertainties.​