People’s Action Party victory to uphold prudent economic, fiscal policies—Fitch

The PAP secured 87 seats in the election.

The victory of the incumbent People’s Action Party (PAP) in Singapore’s election on 3 May suggests that the government will maintain its strong record of prudent macroeconomic policies and adherence to fiscal rules, Fitch Ratings said.

According to Fitch, the newly elected government faces a challenging economic outlook, given uncertainties around US trade policies and the US-China trade war in particular. The Ministry of Trade and Industry on 14 April lowered its growth projection for 2025 to 0%-2%, from 1%-3% previously.

The US has not announced reciprocal tariffs on Singapore beyond the 10% now applicable to all US trade partners.

Despite this advantage relative to some other US trade partners in Asia, Fitch believes Singapore’s economy could still face a substantial indirect impact from US tariffs’ impact on regional and global trade, given Singapore’s high degree of trade openness.

This poses downside risks to Fitch’s estimated 2.6% growth for 2025. However, the medium-term potential growth rate for Singapore is still projected to remain between 2% and 3%.

“The PAP’s election manifesto indicated that the government may extend additional support to businesses, including small and medium-sized enterprises. We do not believe such spending would put downward pressure on Singapore’s rating, given the country’s large fiscal reserve buffers, which we estimate at between 200% and 300% of annual GDP,” Fitch said

The PAP won 87 seats, up from 83 in 2020, with its vote share rising to 65.6%. The Workers’ Party also gained more seats and votes, partly due to weaker support for smaller parties.

The PAP’s continued dominance since 1965 contributes to Singapore’s lower ranking in the voice and accountability pillar of the World Bank’s Governance Indicators. Still, overall governance remains strong, with Singapore scoring in the 90th percentile, close to the ‘AAA’ median of 93.