Trump's Trade War Puts Republic's Economic Growth, Jobs, and Wages at Risk: MAS

The raft of tariffs announced by US President Donald Trump and the uncertainty over the extent of damage they will cause across the global economy will depress economic and wage growth in trade-driven Singapore, said the Republic's central bank.

- Ovais Subhani

In its quarterly macroeconomic review released on April 28, the Monetary Authority of Singapore (MAS) maintained the zero per cent to 2 per cent growth forecast, but warned that prolonged trade conflicts could pose further downside risks to the country.

The weakening growth outlook will, however, keep inflation—already at a four-year low—modest, with both core and all-items inflation averaging between 0.5 per cent and 1.5 per cent in 2025.

Singapore's core inflation, which excludes private transport and accommodation costs to better reflect the expenses of households here, eased to 0.5 per cent year on year in March—its lowest level since March 2021.

While the challenging global trade environment will hit job prospects in trade-related sectors of manufacturing and wholesale trade disproportionately, most firms are likely to pull back on their hiring and expansion plans amid the economic uncertainty, dragging down employment growth for a wider array of sectors, MAS said.

The Ministry of Manpower's preliminary data for the first quarter of 2025, also released on April 28, showed the unemployment rate has ticked up slightly while employment growth slowed from the previous quarter.

MAS said: "Further, heightened geopolitical and trade policy uncertainty poses additional downside risks to Singapore's small and trade-dependent economy, and consequently jobs and livelihoods."

In concert with the deteriorating global growth outlook, economic activity in Singapore has been showing signs of softening since the beginning of 2025.

Singapore's seasonally adjusted gross domestic product (GDP) contracted by 0.8 per cent quarter on quarter in the first three months of 2025, a pullback from the 0.5 per cent expansion in the last quarter of 2024.

MAS said: "While there are nascent indications of economic softening at the sectoral level, these weaknesses have yet to become deeply entrenched or pervasive."