Generous 2025 Budget seen to shield Singapore economy from Trump's war on trade

A budget with no new taxes and plenty of giveaways shows the Government is bracing itself for a potential hit to the economy from US President Donald Trump's escalating trade war.

- Ovais Subhani

The pace of growth is already set to slow from 2024, in line with a decelerating global economy amid rising geopolitical tensions that will weigh on investment and consumer spending.

The Ministry of Trade and Industry (MTI) estimates Singapore's gross domestic product (GDP) will expand between 1 per cent and 3 per cent in 2025, after a surprising jump of 4.4 per cent in 2024.

Analysts estimate the initiatives in the $143 billion Budget - for instance, a 50 per cent corporate income tax rebate and household vouchers that will boost spending - will push GDP growth closer to the higher end of the MTI forecast.

However, if Mr Trump delivers on all his tariff threats, growth will moderate to a pace closer to the weaker end of the MTI forecast as the global economy and trade will slow even further.

Mr Trump has raised tariffs on US imports from China by 10 per cent and levied a 25 per cent tax on all steel and aluminium imports within a month of taking office. More recently, he has signed off on a plan to impose reciprocal tariffs to match all levies on US imports.

He has also declared that domestic taxes aimed at managing local consumption would be included in calculating the reciprocal tariffs.

Analysts said weaker economic growth would bring hardships for Singapore households and businesses.

DBS Bank economist Chua Han Teng told a post-Budget panel discussion organised by the Economic Society of Singapore on Feb 19: "Economic growth of close to 1 per cent would be quite a negative outcome."

He noted that it would be akin to a technical recession, defined as two straight quarters of negative growth.