Singapore economy to slow in 2025 on poorer external outlook

SINGAPORE (ICIS)–Singapore’s GDP growth is projected to slow to 1-3% in 2025, as overall economic growth in its key trading partners is anticipated to ease slightly from 2024 levels, official estimates showed on Friday.

• 2024 GDP growth forecast raised to “around 3.5%”
• Global economic uncertainties have increased
• Singapore’s Q3 petrochemical exports grew by 8.5% year on year

In particular, the US economy is expected to slow due to easing labor market conditions, although investment growth will provide some support, the Ministry of Trade and Industry (MTI) said in a statement.

In contrast, the eurozone will likely see a pickup in growth, driven by stronger consumption and investment recovery amid accommodative monetary policy.

In Asia, China’s GDP growth will moderate due to weaker exports from announced tariff hikes, but domestic consumption will cushion the slowdown as consumer sentiment improves and the property market stabilizes.

Meanwhile, key Southeast Asian economies will experience steady growth, fueled by the upswing in global electronics demand.

GLOBAL GROWTH RISKS WIDEN
“Global economic uncertainties have increased, including uncertainty over the policies of the incoming US administration, with the risks tilted to the downside,” the MTI said.

Intensifying geopolitical conflicts and trade tensions could increase oil prices, production costs, and policy uncertainty, ultimately weakening global investment, trade, and growth, the ministry warned.

Moreover, disruptions to the global disinflation process may lead to tighter financial conditions, desynchronized monetary policies, and exposed financial vulnerabilities, it added.

Singapore’s non-oil domestic exports (NODX) are projected to grow 1.0-3.0% in 2025, following a modest expansion of around 1.0% in 2024, a separate statement by trade promotion agency Enterprise Singapore said on Friday.

“While the external environment is generally supportive of growth, uncertainties in the global economy such as a more challenging and competitive trade environment could weigh on global trade and growth,” it said.

2024 GROWTH UPGRADED
For 2024, the country’s economic growth forecast for 2024 was raised to around 3.5%, above the range of its previous prediction of 2-3%, the MTI said.

Singapore’s stronger-than-expected economic showing in the first nine months and updated assessments of global and domestic economic conditions drove the upward revision in the GDP forecast.

For the first three quarters of the year, GDP growth averaged 3.8% year on year.

Singapore’s economy grew 5.4% year on year in the third quarter of this year, up from the advanced estimates of 4.1%.

In terms of trade, Singapore’s petrochemical exports grew by 8.5% year on year in the third quarter, slowing from the 14.9% expansion in the preceding three months.

Singapore’s NODX grew by 9.2% year on year on year in the third quarter, swinging from the 6.5% contraction in the preceding three months.

Singapore serves as a major petrochemical manufacturer and exporter in southeast Asia, with its Jurong Island hub hosting over 100 international chemical companies, including ExxonMobil and Shell.

Focus article by Nurluqman Suratman