UOB cuts Singapore 2025 growth forecast to 1.5%

Direct cash or voucher disbursements and employment support could cushion the impact.

UOB has cut its full-year growth forecast for Singapore to 1.5% for 2025, down from a previous estimate of 2.5%. 

Risks remain tilted to the downside, and a further revision could follow after the release of Q1 GDP data. 

The Ministry of Trade and Industry is also expected to revise its 2025 GDP forecast range, currently at 1.0% to 3.0%, according to Prime Minister Lawrence Wong, who addressed the potential impact of US tariffs in Parliament on 8 April.

Fiscal support may be stepped up if global or domestic conditions worsen. 

UOB expects possible government responses such as direct cash or voucher disbursements and employment support, similar to measures seen during the 2008 global financial crisis and the COVID-19 pandemic. 

Singapore’s prudent fiscal management provides room for action, with an estimated $14b in accumulated surplus recorded between FY2021 and FY2025.

UOB maintains its 2025 core inflation forecast at 1.0%, with the risk of deflation growing amidst weaker global demand and possible supply gluts. 

Inflation momentum and breadth have also eased in recent months. 

A moderately negative output gap is expected in 2025, and a more accommodative S$REER, supported by a lower S$NEER slope, could help buffer against external shocks.

UOB sees a 60% chance that MAS will reduce the S$NEER slope by 50 basis points to 0.5% per annum in April, followed by a move to a zero appreciation stance later in the year.

A more dovish path involving a full flattening of the slope in April is assigned a 30% probability.
The least likely scenario, with a 10% chance, is for MAS to keep current settings unchanged whilst allowing the S$NEER to ease within the existing band.