Singapore downgrades 2025 GDP growth forecast to 0 to 2%, citing impact of Trump tariffs on global trade

SINGAPORE: Singapore has downgraded its gross domestic product (GDP) growth forecast for 2025 to 0 per cent to 2 per cent, the Ministry of Trade and Industry (MTI) said on Monday (Apr 14), citing the impact of US President Donald Trump’s tariffs on global trade.

The ministry noted that in February, Singapore’s GDP growth forecast for the year remained at 1 per cent to 3 per cent. This took into account an expected easing in the overall growth of Singapore’s key trading partners, including the US and China.

“Since then, the US has imposed a baseline tariff of 10 per cent on all countries and higher reciprocal tariffs targeted at countries that run large trade surpluses with the US,” said MTI. 

It added that the tariffs imposed by Trump and the ongoing trade war between the US and China are expected to “weigh significantly on global trade and global economic growth”.

The growth outlook of economies in the region will be “negatively affected” by a fall in external demand partly due to the tariffs’ wider impact on global trade and growth.

“Business and consumer sentiments will also be dampened, thereby crimping domestic consumption and investments in many economies,” said MTI.

Singapore’s economy grew 3.8 per cent in the first quarter of 2025 compared with the same period a year ago, according to advance estimates from the ministry. On a quarter-on-quarter seasonally adjusted basis, the economy contracted by 0.8 per cent compared to the 0.5 per cent growth in the fourth quarter of 2024 due to sequential declines in manufacturing, and some services sectors such as finance and insurance. 

Advance gross domestic product estimates are mainly computed from data gathered in the first two months of the quarter – January and February in this case.

They are intended as an early indicator of GDP growth for the three-month period, and may be revised later when more data is available.

The tariffs, announced by Trump on Apr 2, impose a universal 10 per cent tariff on all imports into the country, with higher rates for countries deemed to have treated the US “unfairly”.

Trump has since hit the pause button on imposing higher levies on its trading partners – except China – for 90 days, but Singapore, which currently imposes zero tariffs on US imports, is still subject to the baseline 10 per cent rate.

While MTI noted the temporary 90-day pause, the tariff war between the US and China has also intensified, with China raising duties on US goods to 125 per cent. 

“The growth outlook of the US has deteriorated as rising import costs are likely to weaken consumption. China’s growth outlook has also softened as its exports growth is expected to stall amidst the trade war with the US,” said the ministry.

Product-specific tariffs, such as those on cars and automotive parts coming into the US, also remain in place and more could be introduced in the coming months, it noted. 

Trump’s commerce secretary, Howard Lutnick, on Sunday said that critical technology products from China would face separate new duties along with semiconductors within the next two months.

While the situation is evolving as global economies weigh their moves amid heightened market volatility, MTI noted the “substantial” downside risks, such as a possible drop in consumer spending, increased costs and global supply chain disruption, heightening recession fears.

“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,” said the ministry.

“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.

“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.”