Singapore Warns Technical Recession Risk After Q1 Contraction

Singapore's economy contracted in the first quarter of 2025, raising concerns about a possible technical recession defined as two consecutive quarters of contraction, according to government officials. Despite a year-on-year GDP growth of 3.9%, the seasonally adjusted quarterly figure showed a 0.6% decline, with the Ministry of Trade and Industry maintaining its 2025 growth forecast at 0.0% to 2.0% amid ongoing global uncertainties and trade tensions. The first quarter's performance was supported by manufacturing and export activity as companies sought to avoid higher US tariffs, yet the imposition of a 10% baseline tariff by Washington has led some Singaporean firms to delay expansion or redirect funds. Officials emphasized that a technical recession does not equate to a full economic recession, with caution expressed over external demand and the global economic outlook. The Monetary Authority of Singapore has eased policy earlier in the year and is expected to maintain its current stance for now, with potential adjustments considered in 2026 if trade conflicts worsen. The situation reflects broader regional impacts of the US-China trade war and sluggish recovery in China, influencing Singapore's trade-dependent economy.