Singapore - Private sector economists raised their forecast for Singapore’s economic growth in 2025 citing milder-than-expected trade tensions, but they also see the possible levying of semiconductor and pharmaceutical tariffs by the United States as the biggest threat to the outlook.

Singapore’s gross domestic product (GDP) is projected to expand 2.4 per cent this year, according to the latest quarterly survey of professional forecasters by the Monetary Authority of Singapore (MAS) released on Sept 3.

This is higher than the previous survey estimate of 1.7 per cent made in June.

The upgrade comes after the economy’s surprisingly strong performance in the first half of the year, leading the Government earlier to raise its growth forecast for 2025.

The economists, however, see Singapore’s growth slowing to 1.9 per cent in 2026, according to the MAS survey. 

Their latest growth projection for 2025 is still slower than the 4.4 per cent expansion seen in 2024.

However, it is at the higher end of the 1.5 per cent to 2.5 per cent range projected by the Ministry of Trade and Industry (MTI) in August, after it raised its forecast from zero per cent to 2 per cent growth. 

Geopolitical tensions, including from the introduction of semiconductor and pharmaceutical tariffs, have emerged as the foremost downside risk to the outlook for the Singapore economy.

President Donald Trump said earlier in August that the US could initially place a “small tariff” on pharmaceutical imports before hiking it to 150 per cent within 18 months and eventually to 250 per cent in an effort to boost domestic production. He did not specify the initial tariff rate.

Mr Trump also said he plans to announce tariffs on semiconductors and chips, but gave no further details.

External slowdown and financial market volatility were also cited as potential downside risks by economists in the survey.

Milder-than-expected or easing of trade tensions was the most frequently cited upside risk - or factor that could raise the outlook - along with a sustained tech cycle upturn and capital inflows into Singapore.

The Singapore economy grew 4.4 per cent year on year in the second quarter of 2024 - when e conomists in the June survey had tipped second-quarter growth of 3 per cent.

The economists now expect growth to fall to 0.9 per cent in the third quarter of 2025.

Their median forecast for overall inflation in 2025 is 0.9 per cent, unchanged from the June survey. The forecast for core inflation is 0.7 per cent, slightly lower than 0.8 per cent in the previous survey. 

As for the labour market, economists expect the unemployment rate to be 2.2 per cent at year-end, unchanged from the June survey. 

Slightly more than 40 per cent of the economists expect the Monetary Authority of Singapore (MAS) to ease its Singapore dollar policy monetary policy at the next review in October.

Easing can lower the rate of appreciation of the Singapore dollar, helping to make Singapore exports more competitive. A tightening move can strengthen the Singapore dollar to help counter imported inflation.

MAS kept policy unchanged in its last review in July

after easing twice this year, saying economic growth has been more resilient than earlier anticipated.

Almost all the respondents expect that there will not be any monetary policy shift in the January 2026 policy review.

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