Singapore sees technical recession risk after Q1 contraction
SINGAPORE: Singapore could slip into a technical recession this year, a government official said on Thursday after final GDP data confirmed the city-state's economy had contracted in the first quarter even before US tariffs were announced.
The trade-driven economy grew by 3.9% in the first three months of 2025 from the same period a year earlier, the trade ministry said. On a seasonally adjusted basis, the economy contracted by 0.6% in the January-March quarter.
It was possible that Singapore could enter a technical recession, defined as two consecutive quarters of contraction, Beh Swan Gin, the permanent secretary at the trade ministry, told a press conference.
'However, that doesn't necessarily equate to full-blown economic recession, which will be, of course, year-on-year numbers,' he added.
The ministry maintained its growth forecast for 2025 at 0.0% to 2.0%, after last month cutting it from 1.0% to 3.0% following the US announcement of global tariffs.
While recent moves to reduce trade tensions had slightly improved Singapore's external demand outlook, the environment remained challenging, the ministry said in a statement.
'The global economic outlook remains clouded by significant uncertainty, with the risks tilted to the downside,' it said.
Monetary Authority of Singapore deputy managing director Edward Robinson told the press conference that the central bank's policy stance remained appropriate. The MAS
eased policy at reviews in January and April this year.
Maybank economist Chua Hak Bin expected the MAS to maintain current policy settings at its July review, as growth appeared resilient and early second quarter data has been encouraging.
'The probability of a MAS shift to a neutral bias seems higher in 2026 than 2025 if a recession scenario does unfold as front-loading dissipates and the US-China trade war re-escalates,' he said.
Singapore has previously warned of the risk of a recession and job losses due to the fallout from US tariffs, with the trade minister last week saying the growth forecast may need to be further adjusted.
Despite having a free-trade agreement and running a trade deficit with the United States, the wealthy financial hub has been slapped with a 10% baseline tariff rate by Washington.
Other Southeast Asian countries have been threatened with much higher tariffs, although they have been delayed until July and an interim 10% tariff is in place for now.
There will also be indirect impacts on Singapore, one of the world's most open economies and a shipping hub, if the US tariffs constrict global trade.
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