Singapore growth to slow to 2% as global drag worsens: report

The bank warned that if global trade tensions escalate further, growth could slip to as low as 0.5–1%.

Singapore’s economy is poised to slow more sharply than previously expected, with RHB Bank revising its 2025 GDP forecast down to 2%, from 2.8% earlier.

The bank warned that if global trade tensions escalate further, growth could slip to as low as 0.5–1%.

“We recently revised Singapore’s GDP growth from 2.8% to 2.0% for 2025. The downside risks lean towards a growth range between 0.5% - 1.0%, should trade tensions further escalate,” RHB wrote in its latest economic update.

The downgrade reflects deteriorating external conditions, particularly from the intensifying US-China tariff dispute, which continues to disrupt trade flows and weigh on business sentiment.

“Softer export demand resulting from ongoing trade tensions and a slowdown in Singapore’s manufacturing sector is expected to drag the overall economy for the year ahead continuously,” the bank noted.

Singapore’s export-heavy industries, including semiconductors, chemicals, and transport equipment, are expected to face ongoing pressure.

Despite Singapore being subject to a relatively modest 10% US tariff rate compared to its ASEAN peers, RHB pointed out that the broader impact is magnified by the country's exposure to China and its high external trade dependency.

“Singapore is expected to be impacted by the significant spill-over effects from a slowing Chinese economy and the 145% US tariff on China,” the report stated. These sectors, RHB warned, “are likely hardest hit by direct US tariffs on Singapore and the broader impact of rising trade tensions.”

Singapore's first quarter GDP figures underscored the weakening trend. Growth slowed to 3.8% YoY, whilst contracting 0.8% QoQ, marking the first quarterly decline in two years.

“Today's disappointing 1Q25 GDP print is due to year-on-year and sequential declines in manufacturing and some outward-oriented services sectors, such as finance & insurance, in tandem with slowing external demand,” the report said.

On monetary policy, RHB acknowledged MAS’s recent decision to ease slightly by reducing the slope of its S$NEER policy band from 1% to 0.5%. The bank believes the central bank is likely to hold its policy settings steady in the near term, but the “balance of risk” leans toward further easing in the second half of 2025.

Meanwhile, inflation remains subdued. RHB noted that both core and headline inflation forecasts have been revised down to 0.5–1.5%, from earlier estimates of 1–2% and 1.5–2.5% respectively.

The report attributed this to “slower-than-expected inflation on a YTD basis and a decline in global commodity prices.”

With global trade conditions weakening and key sectors slowing, RHB warned that Singapore’s growth outlook will remain fragile in the coming quarters, particularly if geopolitical tensions persist or worsen.