Economists slash Singapore growth forecast to 1.7% amidst global headwinds

The economy expanded 3.9% YoY in Q1.

Private-sector economists have sharply downgraded Singapore’s full-year growth forecast to 1.7%, down from 2.6% in March, citing rising geopolitical tensions, weaker external demand, and tighter global financial conditions.

The revised forecast comes despite stronger-than-expected growth in the first quarter of 2025, when the economy expanded by 3.9% year-on-year—slightly above the median estimate of 3.8%. Growth is projected to ease to 3.0% in the second quarter.

These projections are based on the June 2025 MAS Survey of Professional Forecasters, which compiled responses from 20 economists and analysts. The findings reflect their independent views and not the official position of the Monetary Authority of Singapore.

The most likely range for full-year GDP growth is now between 1.5% and 1.9%, a significant downward shift from the 2.5% to 2.9% range predicted in the March survey.

Respondents now assign a 25% probability that GDP growth could dip below 1.0% this year—up from a 2.0% threshold in the previous survey. Similarly, there is now a 75% chance that growth will stay below 2.0%, compared to below 2.8% in March.

Geopolitical tensions—especially trade-related conflicts—were the most frequently cited downside risk to the outlook. Other concerns include a broad-based external slowdown and tighter global financial conditions.

On the flip side, easing trade tensions remain the most cited upside risk, highlighted by 88% of respondents. A stronger-than-expected recovery in major economies like the US and China, as well as continued momentum in the tech cycle, were also noted as potential tailwinds.

Inflation pressures have subsided. CPI-All Items inflation came in at 1.0% year-on-year in Q1, while MAS Core Inflation was just 0.6%—both below earlier projections. Economists now expect inflation to remain subdued, with full-year forecasts revised to 0.9% for CPI-All Items (down from 1.7%) and 0.8% for Core Inflation (down from 1.5%).

The labour market is expected to remain stable, with the unemployment rate projected at 2.2% by year-end, up slightly from the 2.0% forecast in March.

Expectations are building for further monetary policy easing. Over half of the respondents (57.9%) anticipate that the MAS will ease policy at the upcoming July review, primarily by flattening the slope of the Singapore dollar nominal effective exchange rate (S$NEER) policy band.

Looking ahead to October, 17.6% of respondents expect additional easing via a flattening or reduction of the policy band, while 11.8% foresee a possible downward re-centring of the band.