Key points
- Estimates show economy grew 3.8pc year-on-year in first quarter: Ministry of Trade
- Singapore has eased its monetary policy for the second straight time
- Trump has imposed baseline 10pc tariffs on Singapore
ISLAMABAD: Singapore has downgraded its economic growth forecast for this year, the government has said, as the trade-dependent nation braces for the effects of sweeping US tariffs and the US-China trade war.
AFP reported that although US President Donald Trump imposed the baseline 10 per cent tariffs on Singapore, the city-state is vulnerable to a global economic slowdown caused by the much higher levies on dozens of other countries because of its heavy reliance on international trade.
AFP cited the Ministry of Trade and Industry (MTI) as saying preliminary estimates show that the economy grew 3.8 per cent year-on-year in the first quarter, slower than the previous quarter’s 5.0 percent.
However, it said economic growth for this year was now likely to come in at 0.0-2.0 percent, compared with its previous forecast of 1.0-3.0 percent.
US-China trade war
“The sweeping tariffs introduced by the United States, and the ongoing trade war between the US and China, are likely to weigh significantly on global trade and global economic growth,” the ministry said.
“In particular, the growth outlook of the US has deteriorated as rising import costs are likely to weaken consumption. China’s growth outlook has also softened as its exports growth is expected to stall amidst the trade war with the US.”
Growth for the rest of Asia “will be negatively affected by a fall in external demand due in part to the tariffs’ wider impact on global trade and growth,” it added.
The ministry said “the situation will continue to evolve as the US and other economies weigh their moves amidst heightened market volatility”.
Monetary policy
CNBC reported that Singapore on Monday also eased its monetary policy for the second straight time, as the city-state sees zero growth this year as a possibility after posting a lower-than-expected GDP expansion of 3.8 per cent for the first quarter.
The Monetary Authority of Singapore had eased its policy stance in its January meeting too, loosening policy for the first time since 2020.
The MAS said it would reduce the rate of appreciation of its policy band known as the Singapore dollar nominal effective exchange rate, as it lowered core inflation projections due to the expected weaker economic outlook, according to AFP.
