MTI downgrades Singapore's GDP growth forecast for 2025 to "0.0 - 2.0%"

The ministry said the spike in uncertainty may lead to a larger-than-expected pullback in economic activity as businesses and households adopt a "wait-and-see" approach before making spending decisions.

On 14 April 2025 (Monday), Singapore’s Ministry of Trade and Industry (MTI) announced a downward revision of the nation’s GDP growth forecast for 2025 to "0.0% to 2.0%", reflecting mounting challenges in the global economic environment.

This announcement follows the recent imposition of sweeping US tariffs and the escalation of the ongoing US-China trade war — developments expected to weigh heavily on global trade and economic growth.

MTI cited several key downside risks to the global economy in its latest assessment:

1. First, the spike in uncertainty may lead to a larger-than-expected pullback in economic activity as businesses and households adopt a "wait-and-see" approach before making spending decisions.
2. Second, further tariff measures, including retaliatory tariffs, could lead to a full-blown global trade war, which will upend global supply chains, raise costs and
   lead to a far sharper global economic slowdown.
3. Third, disruptions to the global disinflation process and rising recession risks in both advanced and emerging markets could lead to destabilising capital flows that could trigger latent vulnerabilities in banking and financial systems. 

Against this backdrop, noted a significant weakening in the external demand outlook for the remainder of 2025 — leading to a more pessimistic outlook for Singapore’s outward-oriented sectors. Affected industries include:

• The Manufacturing sector is likely to be negatively affected by weaker global demand.
• The Wholesale trade sector may experience slower growth due to softening global trade.
• The Transportation & storage sector could see dampened growth from reduced demand for shipping and air cargo services.
• The Finance & insurance sector might face weaker trading activity due to risk-off sentiments, which could impact net fees and commission incomes in banking, fund management, forex, and securities dealing.
• Credit intermediation activity is expected to be constrained as firms hold back on capital investment amid economic uncertainty.
• Payments firms may experience moderated growth in line with tepid business activity and reduced consumer spending.

Revised economic outlook for 2025

Based on advance estimates, Singapore’s economy grew by 3.8% year-on-year in the first quarter of 2025, easing from 5% in the previous quarter. On a quarter-on-quarter seasonally adjusted basis, the economy contracted by 0.8%, reversing the 0.5% expansion seen in Q4 2024.

This decline was largely due to sequential slowdowns in the manufacturing sector and outward-oriented services such as finance & insurance, reflecting the impact of weakening external demand.

In February, the Ministry of Trade and Industry (MTI) maintained Singapore’s 2025 GDP growth forecast at 1.0% to 3.0%, citing anticipated slower growth in key trading partners such as the US and China, along with lingering uncertainties surrounding US economic policies and global trade tensions. Since then, the US has implemented broad-based tariffs — including a 10% baseline on all imports and higher reciprocal tariffs targeting countries with large trade surpluses.

These measures have further intensified the US-China trade war, triggering a cycle of retaliatory tariffs and deepening global uncertainty. As a result, global trade and economic activity are expected to slow significantly.

With both the US and China facing weaker growth prospects, and regional economies bracing for softer external demand, subdued sentiment, and slower consumption and investment, Singapore’s economic performance is likely to come under pressure. 

Sectoral performance in Q1 2025

• Manufacturing
  • Grew by 5% year-on-year, moderating from 7.4% in the previous quarter. Growth was broad-based across all clusters except chemicals and general manufacturing. However, on a quarter-on-quarter seasonally adjusted basis, the sector contracted by 4.9%, worsening from flat growth in Q4 2024.
• Construction
  • Expanded by 4.6% year-on-year, slightly up from 4.4% in the previous quarter. Growth was supported by increases in both public and private sector construction. On a quarter-on-quarter basis, it contracted by 2.3%, reversing the 0.3% expansion in Q4 2024.
• Services 
  • The wholesale & retail trade and transportation & storage sectors collectively grew by 4.2% year-on-year in the first quarter, easing from the 5.6% growth in the previous quarter.
    • Growth in wholesale trade was driven by the machinery, equipment & supplies segment.
    • Transportation & storage saw gains in water transport and support services.
    • Retail trade was the only sector in this group that did not grow.
    • On a quarter-on-quarter basis, these sectors expanded by 0.5%, a turnaround from the 0.1% contraction in Q4 2024.
• Information & communications, finance & insurance, and professional services
  • Grew by 3% year-on-year, down from 4.4% previously.
    • IT and digital solutions sustained growth in information & communications.
    • Professional services were supported by business rep offices and consultancies.
    • Finance & insurance benefited from strong performance in banking and payments firms.
      On a quarter-on-quarter basis, this group contracted by 5%, reversing the 5.9% expansion in Q4 2024.
      
• Accommodation & food services, real estate, administrative & support services, and other services
  • Grew by 2.5% year-on-year, maintaining the same pace as Q4 2024.
    • All sectors in this group recorded growth.
    • Real estate posted robust growth due to higher private residential transactions.
      On a quarter-on-quarter basis, the group expanded by 1.4%, up from 0.3% in Q4 2024.