• Singapore downgrades 2025 GDP growth forecast to 0-2% due to U.S. tariffs.
• First-quarter GDP contracted by 0.8%, reflecting external demand challenges.
• Monetary Authority of Singapore eases policy for the second time this year.
• Global trade war between the U.S. and China expected to weigh on regional economies.

Singapore's Ministry of Trade and Industry (MTI) announced a downgrade of the nation’s gross domestic product (GDP) growth forecast for 2025 to a range of 0% to 2%, a notable reduction from the previously stated 1% to 3% due to the adverse effects of U.S. President Donald Trump's tariffs on global trade. MTI cited a "significantly weaker external demand outlook" and concerns over the ongoing U.S.-China trade conflict, which have started to exert considerable pressure on international trade, particularly affecting economies reliant on trade like Singapore, according to Reuters.

The first-quarter estimates showed Singapore's economy expanded by 3.8% year-on-year, yet contracted by 0.8% on a quarter-on-quarter seasonally adjusted basis, marking a downturn from 5% growth in the previous quarter. The MTI emphasized that U.S. tariffs, including a baseline 10% rate on all imports, are expected to have a cascading negative impact on global economic growth and trade, which has led to the adjusted growth forecast, according to Channel News Asia.

The Monetary Authority of Singapore (MAS) responded to the challenging economic climate by loosening its monetary policy for the second time this year, stating it would reduce the rate of appreciation of its exchange rate-based policy band, known as the Singapore dollar nominal effective exchange rate (S$NEER). This strategic move aims to cushion the economy against the pressures from tariffs and a tightening global financial landscape, according to statements from MAS cited by South China Morning Post.

Due to the newly imposed tariffs, the growth outlook in the broader Asian region is likely to suffer from diminished external demand, complicating Singapore's economic recovery trajectory. Both the United States and China are anticipated to face weakened consumption and export growth, respectively, as a result of these tariffs, leading to pronounced ramifications across trade-dependent sectors in Singapore, according to the MTI. As a result, sectors like manufacturing and wholesale trade are identified as particularly vulnerable to these developments, as noted in multiple sources including Channel News Asia and Reuters.

As forecasting conditions become increasingly volatile, and with significant downside risks looming, the Singaporean government is actively monitoring local and global developments to further adjust economic forecasts if required. Prime Minister Lawrence Wong acknowledged that the current situation could affect job opportunities and wage growth, indicating the seriousness of the tariffs’ impact on Singapore’s economy and the broader trade environment, according to South China Morning Post.