Singapore keeps 2025 growth forecast at 0-2%, sees slight boost from US-China truce

The Ministry of Trade and Industry (MTI) has maintained Singapore's economic growth forecast for the year at a range of zero to two per cent, amid encouraging signs of de-escalation in global trade tensions.
Singapore's economy grew by 3.9 per cent year-on-year for the first quarter of 2025, which comes in slightly higher than the 3.8 per cent from advance data in April, according to a statement released by MTI on Thursday (May 22).
However, it is lower than the five per cent growth in the fourth quarter of 2024.
GDP growth in the first quarter was largely driven by the wholesale trade, manufacturing, and finance and insurance sectors. Growth in manufacturing and wholesale trade were likely supported by front-loading activities ahead of anticipated US tariff hikes, added MTI.
In contrast, the accommodation and food & beverage services sectors contracted as a result of lower gross lettings and lower sales volumes respectively.
Back in April, MTI downgraded Singapore’s GDP growth forecast for 2025 to zero to two per cent to account for the "significant deterioration" in Singapore’s external demand outlook as a result of the sweeping tariffs announced by the US.
Since then, the US has implemented a 90-day pause on the reciprocal tariffs and has begun negotiations with various trade partners.
In particular, the US and China have agreed to reduce the tariffs imposed on each other for 90 days.
The US has also created the Economic Prosperity Deal with the UK, which lowered tariffs on car imports and completely removed tariffs on steel and aluminium.
"External demand outlook for the rest of the year has improved slightly compared to April," said MTI.
Despite the recent de-escalation in trade tensions, MTI remains cautious and maintains the April growth forecast, believing that "global economic outlook remains clouded by significant uncertainty, with the risks tilted to the downside".
It reiterated the risk of larger-than-expected pullback in economic activity as businesses and households adopt a "wait-and-see" approach before making spending decisions.
MTI also warned of a re-escalation in tariff actions as the current concessions on US tariffs are only temporary. Retaliatory tariffs are particularly a risk in event that no trade deals are reached once the 90-day pause expires.
As a result of the global uncertainty and related risks, "growth of outward-oriented sectors in Singapore is expected to slow over the course of the year", said MTI.
The manufacturing sector is particularly at risk of being adversely affected due to its exposure to the US market, which will subsequently negatively impact the wholesale trade and transportation and storage sector.
MTI was upbeat on the transport engineering cluster within the manufacturing sector however, citing aircraft maintenance, repair and overhaul works that are higher value-added.
MTI also cautioned that the finance and insurance sector may be impacted by weaker trading activity and lower consumer spending.
"Given the heightened uncertainty, MTI will continue to monitor developments closely, and make adjustments to the forecast as necessary in the coming quarters," said MTI's permanent secretary, Dr Beh Swan Gin.
At a separate media doorstop on Friday (May 16), Deputy Prime Minister Gan Kim Yong cautioned that uncertainty still remains despite the positive developments in the US trade negotiations.
"It's too early to tell what the outcome will be," he said then, adding that the US-China tariff pause is only temporary, no matter how encouraging it seems in the short-term.
He added that the US is unlikely to back down on their baseline 10 per cent tariffs, based on discussions with US Treasury Secretary Scott Bessent, but that Singapore is actively engaging with the US to negotiate concessions on potential sectoral tariffs that may be implemented on pharmaceuticals and semiconductors.
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