FX.co ★ Singapore Flags Recession Risk This Year

Singapore may face a technical recession this year, as a government official indicated following the release of final GDP data which showed the economy contracted in the first quarter of 2025. This contraction occurred even before the implementation of U.S. tariffs. Although the trade-dependent economy experienced a 3.9% year-on-year growth, it shrank by 0.6% on a quarter-on-quarter basis. Permanent Secretary Beh Swan Gin noted that while a technical recession, defined as two consecutive quarters of economic contraction, is possible, it does not necessarily signal a full-scale economic recession. The Ministry of Trade has maintained its growth forecast for 2025 at a range of 0.0% to 2.0%, pointing to ongoing challenges in the global environment despite slight improvements in external demand. Despite having a free trade agreement and a trade deficit with the United States, Singapore is subjected to a 10% baseline tariff imposed by Washington. In response to rising costs, several companies in the city have reportedly postponed expansion plans or reallocated funds.