[SINGAPORE] The Republic’s growth may be flat this year, with the official forecast downgraded to “0 to 2 per cent” for 2025 – from a range of 1 to 3 per cent previously – as Singapore braces for the impact of US President Donald Trump’s “reciprocal” tariffs.
“Although there has been a temporary 90-day pause in the implementation of the higher reciprocal tariffs, except for China, the tariff war between the US and China has intensified, with an escalating cycle of tit-for-tat tariffs being imposed by both sides,” said the Ministry of Trade and Industry (MTI) on Monday (Apr 14).
“Product-specific tariffs implemented by the US earlier also remain in place and more could be introduced in the coming months,” it added.
These developments are expected to weigh significantly on global trade and growth, said the ministry. Against this context, the external demand outlook for Singapore, too, has weakened significantly.
In particular, the manufacturing sector is likely to be affected by weaker global demand. Softening global trade will also weigh on the wholesale trade sector as well as the transportation and storage sector, through a drag on demand for shipping and air cargo services.
Meanwhile, the finance and insurance sector could see weaker trade activity due to risk-off sentiments that will adversely affect the net fees and commission incomes of the banking, fund management, forex and security dealing segments.
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“In addition, the uncertain economic backdrop will likely dampen firms’ capital investment spending and constrain credit intermediation activity”, said MTI. The growth of payments firms could also moderate in tandem with tepid business activity and lower consumer spending.
MTI will continue to closely monitor global and domestic development and make further adjustment to its forecast if necessary.
Slower Q1 growth
In Q1, Singapore’s economy grew 3.8 per cent, slower than the 5 per cent growth recorded in the previous quarter, according to advance estimates.
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The figure was also below private-sector economists’ median expectations of 4.5 per cent growth, according to a Bloomberg poll.
On a seasonally adjusted quarterly basis, gross domestic product contracted by 0.8 per cent, reversing from the previous quarter’s 0.5 per cent growth. This followed sequential declines in manufacturing and some other outward-oriented sectors – such as finance and insurance – in tandem with slowing external demand, said MTI.
Manufacturing growth slowed to 5 per cent year on year in the first quarter, down from the 7.4 per cent expansion in the previous quarter. Output expansions were recorded in all clusters except for chemicals and general manufacturing.
Sequentially, the manufacturing sector contracted by 4.9 per cent, after growth was flat in the previous quarter.
Construction grew by 4.6 per cent year on year in Q1, a slight acceleration from the previous quarter’s 4.4 per cent growth. This was due to an increase in both public and private sector construction output, said MTI.
The sector fell 2.3 per cent quarter on quarter, a pullback from the previous quarter’s 0.3 per cent expansion.
On the whole, the services sectors expanded 3.4 per cent year on year, moderating from 4.6 per cent growth previously. Sequentially, it recorded 0.3 per cent growth, slowing down from Q4’s 0.9 per cent increase.
Within services, the wholesale and retail trade sector, along with the transportation and storage sector, grew 4.2 per cent on the year, decelerating from the 5.6 per cent growth in Q4.
On a quarter on quarter basis, the sector expanded 0.5 per cent, rebounding from the 0.1 per cent contraction in the previous quarter.
Meanwhile, the information and communications, finance and insurance, and professional services sectors collectively rose 3 per cent in Q1, from 4.4 per cent previously. Sequentially, however, the cluster shrank 5 per cent, reversing from Q4’s 5.9 per cent expansion.
The group of services comprising accommodation and food, retail estate, administrative and support, and other services grew 2.5 per cent, the same as in Q4. On a quarter-on-quarter basis, it grew 1.4 per cent, quicker than the previous quarter’s 0.3 per cent growth.
