Singapore slashes 2025 GDP growth on escalating US-China trade war

SINGAPORE (ICIS)–Singapore’s Ministry of Trade and Industry (MTI) on Monday cut the country’s 2025 GDP growth forecast to 0-2% from a previous 1-3%, citing escalating US-China trade tensions and the impact of reciprocal tariffs on global trade.

• Singapore lowers projected GDP growth for 2025 to 0-2%
• Trade war, tariffs to negatively impact global demand, consumption
• Lower manufacturing hits Q1 2025 growth

Singapore’s revision of its GDP growth forecast comes amid US ‘reciprocal’ tariffs, initially announced on April 2nd but subsequently suspended for 90 days.

While Singapore received a baseline 10% tariff, other southeast Asian nations such as Vietnam and Thailand were slapped with 46% and 36% levies, respectively.

“The sweeping tariffs introduced by the US, and the ongoing trade war between the US and China, are expected to weigh significantly on global trade and global economic growth,” the MTI said in a statement.

A fall in external demand resulting from US President Donald Trump’s tariffs will negatively impact on growth outlooks in the southeast Asian region, while dampened business and consumer sentiments will lead to a crimping of domestic consumption in many economies, MTI said.

“Against this backdrop, MTI’s assessment is that the external demand outlook for Singapore for the rest of the year has weakened significantly,” said MTI, adding that the manufacturing sector is likely to be particularly negatively affected by weaker global demand.

“Given the significant downside risks, MTI will continue to closely monitor global and domestic developments, and make further adjustments to the forecast if necessary,” the ministry added.

In the latest escalation of a brewing trade war, Trump raised the US’ tariffs on Chinese products to 145%, inclusive of 125% on 10 April, after China retaliated with 125% tariffs on US goods.

The US also paused its reciprocal tariffs on all countries for 90 days, except China.

Before the pause on reciprocal tariffs, the World Trade Organization (WTO) had forecast trade growth to decline by 1.0% in 2025, from 3.0% previously, MTI said.

MONETARY POLICY EASED
In response to a dimming economic outlook, Singapore’s central bank eased its monetary policy on Monday for the second time in 2025, reducing slightly the rate of appreciation of the Singapore dollar nominal effective exchange rate (NEER) amid weakening economic activity.

The NEER refers to the value of Singapore dollar against a basket of currencies of its major trading partners.

However, the Monetary Authority of Singapore (MAS) will carry on with a policy of a modest and gradual appreciation, unchanged from its previous statement in January.

“Prospects for global trade and GDP growth dimmed in early April” following the US’ reciprocal tariffs, the MAS said.

Meanwhile, the MAS’ core inflation eased “significantly” to 0.7% year on year in January-February 2025, from 1.9% in Q4 2024, a larger fall than expected as weakened consumer spending dampened price increases.

Enhanced government subsidies, implemented during the country’s Budget for 2025, also contributed to lower services inflation, MAS said.

The MAS Core Inflation is now forecast to average 0.5-1.5% in 2025, which is down from 1.0-2.0% in January, as it expects prices to continue to moderate more slowly.

SE ASIA RESPONDS
On 10 April, following an emergency meeting among the 10-nation ASEAN group, the region’s economic ministers affirmed their deep concern over the tariffs, adding that they will aim to work with the US on a mutually beneficial deal.

The ministers also said they will continue to work together to find ways to boost trade within the southeast Asian region amid a simmering trade war.

“The ongoing trade war marks a sharp fracturing of the global economy that has profound impact for Singapore and the entire ASEAN region,” said Singapore Deputy Prime Minister Gan Kim Yong following the meeting.

“ASEAN looks forward to constructive dialogue with the US to address concerns and explore enhancing cooperation in areas of mutual interest,” Gan, who is also minister for trade and industry, added.

ECONOMY SLOWS
Singapore’s economy also grew by 3.8% in the first quarter of 2025 according to advanced estimates, lower than 5.0% growth in the previous quarter, the MTI said on Monday.

Declines in manufacturing and external demand slowing were among the reasons for the decline, the MTI said.

The manufacturing sector grew by 5.0% year on year, compared with the 7.4% expansion in the previous quarter, with falls observed in the chemicals and general manufacturing clusters.

Singapore’s petrochemical exports grew by 4.8% year on year in February, which boosted overall non-oil domestic exports (NODX) for the month, according to official data.

This was a reversal from a fall of 0.3% year on year in petrochemical exports observed in January.

Singapore has no hydrocarbon resources and imports crude oil for its refining and petrochemical industries.

More than 100 global chemical firms, including energy majors ExxonMobil and Shell, are housed at its petrochemical hub, Jurong Island.

Thumbnail image shows a Singapore port (Source: WALLACE WOON/EPA-EFE/Shutterstock)

Focus article by Jonathan Yee

Visit the ICIS Topic Page: US tariffs, policy – impact on chemicals and energy.