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Straits Times
13-05-2025
- Business
- Straits Times
Singapore's economic outlook brightens on US-China de-escalation, but tariff uncertainty remains
SINGAPORE - The outlook for Singapore's export-driven economy has brightened as the world's two largest economies stepped back from a tariff war that could collapse trade between them and trigger a global recession, analysts said. The United States and China agreed on May 12 to suspend their triple-digit reciprocal tariffs for 90 days for much lower levies while negotiations continue for a broader and sustainable trade deal. The three-month pause will see tariffs on US exports to China cut to 10 per cent from 125 per cent, while levies on Chinese exports will be reduced to 30 per cent from 145 per cent. However, some analysts warned that the excitement over the deal could wane in coming days as realisation sets in that 90 days may prove too short a period to arrive at a comprehensive trade deal between two countries that consider each other as strategic competitors and have been locked in a trade war since 2017. Still, for investors, the cool-down period represents a reprieve from a scenario where US consumers suffer massive price hikes and empty store shelves, while China endures loss of its biggest export market and a drop in manufacturing output. 'The US-China trade deal is a significant de-escalation and allows trade to resume from what was essentially a deep freeze,' said Mr Chua Hak Bin, regional co-head of macro research at Maybank. He said while a 30 per cent tariff rate on Chinese exports is by no means low - and remains higher than the 10 per cent tariffs faced by most other countries, including Singapore - it will be more manageable than the 145 per cent rate. Mr Adam Pickett, who heads Citibank's global macroeconomic strategy, said the reduction in US tariffs on China represents an effective tariff rate change from 25 per cent to 12 per cent. The effective tariff rate considers both the nominal tariff on a final imported product and any tariffs on imported inputs used in making that product. 'This is a gamechanger for tactical risk,' he said, referring to assets including currencies, credit, stocks and commodities. US dollar surged against its major peers after weeks of persistent decline. The rally saw the Singapore currency ease against the greenback. Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
04-05-2025
- Business
- Business Times
GE2025: Political stability, policy continuity should buoy business confidence in Singapore: economists, trade chambers
[SINGAPORE] The clear mandate given to the ruling People's Action Party (PAP) in Singapore's 2025 General Election (GE) should reassure investors and businesses, paving the way for decisive action while signalling stability and continuity, economists and trade chambers said. The PAP secured 65.57 per cent of the popular vote, up from 61.24 per cent in GE2020. With this strong mandate, the business community now expects more action. Said Maybank economist Chua Hak Bin: 'PM Lawrence Wong can form a new Cabinet quickly within the next few weeks and focus on the many economic challenges at hand, particularly the global trade war and tariff shocks.' 'Businesses and investors will be reassured that rationality and prudence will prevail (in Singapore), and fiscal support will be forthcoming if the economic downturn worsens,' he said. Similarly, the Singapore Chinese Chamber of Commerce & Industry said that it looked forward to the formation of a 'capable and united government team' to take Singapore through growing global uncertainty. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Strong leadership will be critical to sustain growth, strengthen resilience, and reshape Singapore's economy, said the chamber. Reassuring stability 'Markets and businesses will receive the results well, given the policy continuity and political stability,' said Maybank's Chua. He drew a contrast with other democracies that saw 'massive and disruptive shifts' in parties and policies in the last few years, which dampened growth and investments. Similarly, DBS economist Chua Han Teng said that the strong mandate 'will reassure investors of ongoing political stability and policy continuity'. This, he added, 'has the potential to enhance Singapore's already favourable business environment'. Singapore International Chamber Of Commerce CEO Bita Seow said: 'Political transitions here are carefully managed and institutional frameworks are resilient, providing the predictability and certainty investors value.' She noted that political continuity 'strengthens Singapore's brand as a trusted, dependable international business hub', but added: 'However, even in times of leadership change, Singapore's strong institutions, robust governance, and clear national priorities have ensured that the country's reputation remains unshaken.' Sustained fundamentals Beyond the election result, economists and trade chambers stressed that Singapore's fundamentals are what keep it attractive to investors. Said Seow: 'What matters most to businesses is the continuation of core attractiveness of Singapore: integrity, efficiency, and openness to global talent and trade – all of which are deeply entrenched in Singapore's system.' DBS' Chua said the strong rule of law, favourable business environment, access to skilled talent, and high infrastructure connectivity will keep Singapore a 'stable and trusted investment destination' in an increasingly turbulent global economy. But while OCBC's chief economist Selena Ling agreed that a clear mandate 'is likely a plus', she added that economic policy continuity may not necessarily mean an easy path ahead. Singapore's domestic stability does not change how the global order is coming apart, she added – though Singapore still looks attractive to foreign investors as a 'safe harbour' in an uncertain world. Tougher policies? Separately, at a Sunday morning webinar held by scholar collective panellist Bertha Henson suggested that the strong mandate could enable the new PAP leadership to push through unpopular policies. The former journalist cited the precedent of how GE2015 – when the PAP's vote share rose to 69.86 per cent, from 60.14 per cent in 2011 – was followed by 'fierce and tough' policies. While Henson did not cite specific examples, that term of government saw the announcement of the planned goods and services tax hike from 7 to 9 per cent, as well as the passing of the controversial Protection from Online Falsehoods and Manipulation Act in 2019. For more election coverage, visit our GE2025 microsite
Reuters
14-04-2025
- Business
- Reuters
Singapore central bank eases monetary policy as US tariffs threaten growth
SINGAPORE, April 14 (Reuters) - Singapore's central bank loosened its monetary policy for the second time this year on Monday, as expected, saying prospects for global growth and trade have dimmed amid U.S. tariffs, and the trade ministry cut its growth forecast for the city-state. The Monetary Authority of Singapore said it would slightly reduce the prevailing rate of appreciation of its exchange rate-based policy band known as the Nominal Effective Exchange Rate, or S$NEER. The width and the level at which the band is centred were unchanged, it said. The central bank said exporting countries hit by tariffs will face weaker demand and pressure to lower prices for their output, meanwhile global financial conditions have tightened as asset markets start repricing risks in the global economy. "These factors will exert widespread and potentially reinforcing drags on production, trade, and investments in Singapore's major trading partners," the MAS said. "A more abrupt or persistent weakening in global trade will have significant ramifications on Singapore's trade-related sectors, and in turn, the broader economy," the MAS said. Economists said they would not rule out another easing in the second half of the year if economic conditions deteriorate, given the central bank's dovish rhetoric. OCBC economist Selena Ling said: "Reference to the output gap turning negative and inflation risks to the downside are explicit." Analysts polled by Reuters had widely expected the MAS to loosen monetary policy by reducing the slope of the band in which it allows the S$NEER to trade. Instead of interest rates, the MAS manages monetary policy by letting the local dollar rise or fall against the currencies of its main trading partners within the S$NEER. The Singapore dollar reversed earlier losses to trade higher after the policy decision. GDP DOWNGRADED Singapore is often seen as a bellwether for global growth as its international trade dwarfs its domestic economy. Separate data showed the economy grew 3.8% in the first quarter from a year earlier, slowing from an expansion of 5.0% in the fourth quarter and 4.4% in 2024. The trade ministry on Monday downgraded Singapore's GDP growth forecast for 2025 to 0% to 2% from the previous range of 1% to 3%. Maybank economist Chua Hak Bin said further easing in the second half to a neutral bias was possible, in the event of a technical recession, but he was "pencilling in a slowdown, not a recession at this stage". "We maintain our GDP growth forecast at 2.1%, slightly above MTI's new range of 0%-2%," he added. On Monday, the central bank adjusted its core and headline inflation forecasts for 2025 to 0.5% to 1.5% from a previous 1% to 2% and 1.5 to 2.5%, respectively.
Reuters
26-03-2025
- Business
- Reuters
Singapore February manufacturing output falls 1.3% y/y
SINGAPORE, March 26 (Reuters) - Singapore's manufacturing output in February fell 1.3% from the same period a year earlier, bucking expectations of growth due mainly due to a steep decline in the biomedical sector, official data showed on Wednesday. Analysts had expected a 7% year-on-year expansion in February, according to a Reuters poll. Make sense of global markets with the Trading Day newsletter. Sign up here. On a month-on-month and seasonally adjusted basis, manufacturing output fell 7.5% in February, missing analysts' expectations of a 0.1% expansion. Biomedical manufacturing output fell 14.3% year-on-year and pharmaceuticals plunged 30%, data from the Singapore Economic Development Board showed, due to weaker demand. Electronics also fell 6.4% year-on-year due to weakness in segments including semiconductors, which was down 9.5%. Maybank economist Chua Hak Bin said Singapore's manufacturing recovery momentum has clearly waned as consumers and businesses turn more cautious given uncertainty over U.S. President Trump's intention to implement new tariffs from April 2. "Singapore will likely be spared from the reciprocal tariffs on April 2 as its not one of the 'Dirty 15', but may be hit if the 25% tariffs on semiconductors are introduced," he said, referring to countries the United States has said it may focus its tariffs on.
