Singapore shows signs of slowdown ahead of Trump's biggest tariff salvo on April 2

Indicators of a potential slowdown are piling up as Singapore businesses and trade partners overseas pull the brakes on future commitments ahead of a US proclamation on April 2 of reciprocal tariffs that will target all nations — dubbed Liberation Day by US President Donald Trump.

- Ovais Subhani

From manufacturing output to exports, recent data showed a waning momentum from 2024, when the Singapore economy grew at an exceptional pace of 4.4 per cent.

The Ministry of Trade and Industry's forecast for 2025 gross domestic product (GDP) growth stands at 1 per cent to 3 per cent, and most analysts believe the actual outcome would be on the higher side of the range.

However, a tariff-induced tilt towards the lower end would in time jeopardise jobs and pay cheques.

While Mr Trump's protectionist policies may take time to have a real impact on the global economy, the clear and present danger has always been that businesses and consumers will put on hold their spending plans until they get some clarity on how disastrous the measures would be on their financial well-being.

The policy uncertainty, in addition to the haphazard execution and conflicting comments by the Trump administration, has roiled US financial markets, prompted economists and the US Federal Reserve to cut their US growth forecasts and raise inflation projections, factoring in the potential impact of higher import costs.

Several surveys have also found evidence of a pullback in hiring intentions and investment plans by US businesses.

In Singapore, the Economic Development Board's monthly data on manufacturing performance showed that the sector's output fell in February by 1.3 per cent year on year, compared with an 8 per cent increase in January.

The contraction was the first since June 2024 and was a surprise, given that base effects should have been supportive as Chinese New Year was in February 2024.

CNY holidays mean fewer working days in that particular month, which results in lower output and hence sets a lower base for the corresponding month the following year.