Economic trends to watch for Singapore in 2025

Inflation, financial market volatility and geopolitics among developments to note

- Ovais Subhani

Formidable challenges ranging from the US-China trade conflict to geopolitical tensions and market volatility suggest that Singapore's economy is in for a rockier ride.

Outcomes may exceed expectations, of course, but with the country's key trading partners also facing the same issues, slower growth looks to be on the cards.

The Ministry of Trade and Industry (MTI) has forecast that real gross domestic product (GDP) growth will range from 1 per cent to 3 per cent in 2025. This is less than the 4 per cent 2024 GDP growth estimate given by Prime Minister Lawrence Wong in his Dec 31 New Year speech.

1. TRADE WAR

Much of the uncertainty around the global economic outlook stems from the potential imposition of severe tariffs by the new United States administration on its trading partners.

President-elect Donald Trump, who takes office on Jan 20, has vowed to increase tariffs by as much as 20 per cent for all trading partners, and a 60 per cent increase for China.

Even if Singapore avoids US tariffs, the trade war will raise import prices globally, diminish demand and reduce trade volumes - an unfavourable situation for an economy reliant on exports and one that imports nearly all it consumes.

Most analysts believe that a full-scale retaliatory tariff escalation among the world's three major economies - the US, China and the European Union - could reduce Singapore's GDP growth by at least 1 percentage point from the top end of the MTI projection.

2. SLOWER CHINA

Asia, including Singapore, is perceived as more susceptible to the economic performance of China, the world's second-largest economy. The International Monetary Fund predicts that China will grow by 4.5 per cent in 2025, down from an estimated 4.8 per cent in 2024 and 5.2 per cent in 2023.