Singapore economy showing early signs of fatigue amidst trade concerns: Analysts

Advance estimates showed 1Q GDP growth slowing to 3.8% YoY, down from 5% in the previous quarter.

Singapore’s economic growth is showing early signs of fatigue as the Ministry of Trade and Industry (MTI) slashed its full-year 2025 GDP forecast to a range of 0% to 2%, citing “rising headwinds for global trade,” according to analysts.

Advance estimates showed 1Q GDP growth slowing to 3.8% YoY, down from 5% in the previous quarter. On a quarterly basis, the economy contracted by 0.8%, with manufacturing and services sectors leading the downturn.

The Ministry’s downgrade is the latest sign that external risks are beginning to weigh more heavily on Singapore’s export-dependent economy. CGS International analysts called the GDP result “below expectations,” warning that “we expect weaker economic growth for the rest of 2025 as sweeping tariffs reduce external demand.”

Maybank economists agreed, stating “we are pencilling in a growth slowdown, but not a recession at this stage.” Still, they acknowledged that the first-quarter contraction was sharper than anticipated, as manufacturing output slipped and some outward-oriented services, such as finance and insurance, lost momentum.

At the centre of the slowdown is a rising storm of global trade tension. Analysts from CGS International pointed out that “Singapore’s high dependence on external demand leaves it particularly vulnerable to global trade disruptions.”

They highlighted that although Singapore is facing only a modest 10% tariff from the United States, “the intensifying trade tensions between the US and China… are expected to spill over more broadly into the global economy.”

These fears were echoed by the Monetary Authority of Singapore (MAS), which responded by easing monetary policy for the second consecutive time this year. On April 14, MAS reduced the slope of its Singapore dollar nominal effective exchange rate (S$NEER) policy band—seen as a signal of policy loosening.

In a bid to keep economic conditions supportive, MAS also revised its core inflation forecast downward to 0.5%–1.5% for 2025, citing falling energy prices, cooling labor cost pressures, and increased government subsidies.

Despite the slowdown, Maybank economists noted there’s “less of a need to ease policy all the way to a neutral 0% slope at this juncture.”

Singapore retains fiscal space to support the economy if conditions worsen. Maybank estimates a $14.3b fiscal surplus is available to deploy in 2025 without needing to draw on past reserves.

Whilst growth has slowed and risks are mounting, analysts remain cautiously hopeful. Maybank continues to forecast 2.1% growth for 2025, just above the revised official range, supported by construction activity, falling interest rates, and potential fiscal stimulus.

Still, both research houses emphasised vigilance. The outlook hinges heavily on external developments, with CGS International warning that “a sharper or more prolonged downturn in global trade could have material spillover effects on Singapore’s trade-related industries and, by extension, the wider economy.”