In a cautious move reflecting growing global uncertainty, Singapore’s central bank, the Monetary Authority of Singapore (MAS), eased its monetary policy for the second time this year. The decision comes amid deteriorating global trade conditions—largely driven by rising U.S. tariffs—and a bleaker economic outlook for 2025.
On Monday, Singapore’s Ministry of Trade and Industry (MTI) cut the country’s 2025 GDP growth forecast from 1%–3% to 0%–2%, following data showing a 0.8% contraction in Q1. Despite this dip, Singapore’s economy still grew 3.8% year-on-year, although at a slower pace than previous quarters.
Often considered a barometer for global trade, Singapore is feeling the strain as countries impacted by tariffs face lower export demand and tightened financial conditions.
To adapt, MAS is allowing a slower appreciation of its currency policy band (S$NEER) while keeping the band’s width and midpoint unchanged. The central bank warned of potential drags on trade, production, and investment across major trading partners.
Selena Ling, Economist at OCBC, believes MAS is being measured and said, “They’re keeping room to maneuver, especially since tariff-related uncertainty is constantly shifting.”
On the other hand Philip Wee, Economist at DBS Bank, noted, “MAS is watching global trade risks closely, but hasn’t concluded we’re heading into a recession.” While Chua Hak Bin from Maybank added, “We’re expecting a slowdown, not a recession. Further policy easing could come if things worsen.”
Meanwhile, inflation forecasts for 2025 have been trimmed, with core inflation now seen at 0.5%–1.5%, and headline inflation at 1.5%–2.5%. Interestingly, the Singapore dollar bounced back post-announcement, showing confidence in MAS’s calibrated approach.
