MAS flags sharp downside risks from US-led trade shocks

It noted that approximately 55% of Singapore’s domestic exports to the US are now subject to the 10% tariff.

The Monetary Authority of Singapore (MAS) has warned that newly imposed US tariffs will deliver a "broad negative income and demand shock" to Singapore’s economy, with growth expected to slow significantly this year.

According to MAS’s Macroeconomic Review released this month, the United States' decision to impose a 10% baseline tariff on nearly all imports is set to "weigh on business and consumer spending" globally and trigger a slowdown in export demand. Singapore, which is deeply plugged into global trade, is particularly exposed.

"Singapore’s growth outlook has turned more cautious amid an increasingly challenging global trade environment," MAS said. "The impact of the tariffs will propagate through multiplier effects and generate a broader negative income and demand shock to the Singapore economy."

MAS noted that approximately 55% of Singapore’s domestic exports to the US are now subject to the 10% tariff, covering a wide range of manufacturing goods.

Although some key sectors such as semiconductors and pharmaceuticals — which represent about 40% of exports to the US — are currently exempt, the report cautioned that "the US administration has initiated trade probes into imports of these goods on national security concerns and could impose restrictions in the coming months."

The review also highlighted indirect risks through Singapore’s trading partners: "Reciprocal tariffs will also be transmitted to Singapore through its trade linkages with other countries hit by these tariffs," including China, Vietnam, and the European Union.

Global growth is also expected to take a hit. "Prospects for global trade and GDP growth dimmed in early April," the report stated. "Global GDP growth is expected to slow significantly to between 2–2.5% in 2025, from 3.2% last year."

As a result, Singapore’s GDP growth is forecast to slow to between 0–2% this year, compared to 4.4% in 2024. "The aggregate level of output will come in below the economy’s potential this year," MAS added.

The central bank warned that downside risks remain elevated, noting, "A more abrupt or persistent weakening in global trade will have significant ramifications on Singapore’s trade-related sectors, and in turn, the broader economy."

Amidst these global uncertainties, MAS has slightly reduced the rate of appreciation of its Singapore dollar policy band to maintain price stability, citing weaker inflationary pressures ahead.