GDP forecast at 2% with downside risk in 2025: RHB

The economic outlook has become “increasingly fluid” due to mounting external pressures, the report noted.

Singapore’s GDP is projected to grow 2% in 2025, but analysts warn that rising global trade tensions and weakening manufacturing activity could drag growth down to as low as 0.5%.

According to a new report by RHB Economics & Market Strategy, the economic outlook has become “increasingly fluid” due to mounting external pressures.

“The growth outlook remains underpinned by softer export demand due to US tariff policies and a slowdown in Singapore's manufacturing sector,” the report stated. “We maintain our forecast for Singapore’s GDP growth at 2.0% in 2025, with downside risks pushing towards a 0.5%–1.0% range should global trade tensions intensify.”

Singapore, despite facing the lowest reciprocal US tariff rate in ASEAN at 10%, remains highly exposed. “Its strong dependence on global trade and economic growth makes its external and domestic sectors particularly susceptible to a slowdown,” the report added.

The RHB team, led by Chief Economist Barnabas Gan, outlined two scenarios. In the base case, a 10% US tariff on Singaporean goods could shave 0.4 percentage points off GDP. In the worst case, with tariffs raised to 20% and global retaliation, GDP could decline by up to 0.6 percentage points.

Export-oriented sectors, particularly chemicals, machinery, transport equipment, and electronics, are flagged as the most vulnerable. “Singapore’s export-oriented sectors... are expected to bear the brunt of the direct US tariff and the spill-over effects from rising trade tensions,” the analysts wrote.

Singapore’s high trade dependency compounds the risk. With exports and imports making up more than 90% and 80% of GDP, respectively, any disruption has outsized effects. “A 1% drop in Singapore’s exports is associated with a 0.99% decrease in goods imports,” the report highlighted.

Beyond direct tariffs, secondary spillovers are anticipated from weaker US consumption, China’s slowdown, and falling global semiconductor demand. “Deteriorating external demand could pose a serious downside risk to Singapore’s trade and overall economic growth,” the report cautioned.

Despite these headwinds, Singapore retains policy room. The Monetary Authority of Singapore has eased its stance, and Budget FY2025 includes measures to offset cost pressures and support businesses.

“Singapore has a proven history of implementing counter-cyclical stimulus measures,” the report noted, pointing to the city-state’s fiscal strength and past responses to economic shocks.