Singapore export outlook dims as trade war escalates

[SINGAPORE] Several economists have downgraded their projections for Singapore's key exports, forecasting a decline in 2025 as the country grapples with the global trade turmoil triggered by US President Donald Trump’s tariff measures. Enterprise Singapore, which published the latest data for non-oil domestic exports (Nodx) on April 17, stated that it is “actively monitoring the evolving tariff situation and will revise the Nodx forecast for 2025 as needed to reflect shifting market conditions.”

Earlier in February, the agency had anticipated a modest 1 to 3 percent growth in Nodx for 2025, following a meager 0.2 percent growth in 2024.

Experts suggest that the ongoing US-China trade tensions are already reverberating across Asia, leaving Singapore’s export-dependent economy particularly vulnerable. The International Monetary Fund (IMF) recently cautioned that prolonged trade disruptions could reduce GDP growth by 0.5 to 1 percent for small, open economies like Singapore, further complicating efforts to revive the economy.

Recent data revealed a slowdown in growth of key exports in March, just before Mr. Trump’s global tariff announcement on April 2, which sparked an intensifying trade conflict with China. In March, shipments rose by 5.4 percent year-on-year, falling short of expectations and slower than the 7.5 percent growth recorded in February. Analysts surveyed by Reuters had predicted a 14.1 percent increase.

Exports of electronics grew by 11.9 percent year-on-year, though this growth came from a low base last year. The increase was driven by personal computers, disk media products, and integrated circuits.

However, the semiconductor sector, a key driver of Singapore's electronics exports, is facing additional challenges as major technology firms reevaluate their supply chains in light of tariff uncertainties. Taiwan Semiconductor Manufacturing Company (TSMC), a significant buyer of Singapore-made components, has reportedly delayed orders, signaling potential instability in the sector.

Exports of non-electronic goods rose by 3.8 percent, half the pace of the 7.7 percent growth seen in February. Non-monetary gold saw a remarkable 64.7 percent increase, while pharmaceutical exports climbed by 24.9 percent. Exports to Taiwan, Indonesia, and South Korea showed positive growth, but shipments to China—Singapore’s largest export destination—declined.

The drop in exports to China underscores broader regional trade shifts, with Southeast Asian countries like Vietnam and Malaysia benefiting from redirected manufacturing orders. However, economists warn that these shifts are unlikely to fully compensate for the losses stemming from weaker demand in China, given Singapore’s deep integration with the Chinese industrial ecosystem.

The primary drag on Nodx came from China, where shipments fell by 29.4 percent, compared to a 27.4 percent decline in January. Maybank Research senior economist Chua Hak Bin noted that the decline in exports to China suggests that US tariffs are disrupting both Chinese demand and manufacturing supply chains.

“Looking ahead, export growth is losing momentum and may contract in the coming months,” he said. Shipments to the United States increased by 5.7 percent in March, sharply lower than the 21.5 percent growth recorded in February.

Exports to Taiwan rose by 45.7 percent in March, following a 77.9 percent surge the month prior, driven by specialized machinery, measuring instruments, and integrated circuits. Shipments to Indonesia grew by 63 percent in March, recovering from a 5.4 percent decline the previous month, bolstered by exports of ship structures, personal computers, and non-monetary gold.

Exports to South Korea rose by 21.6 percent in March, following a 31.4 percent increase in February, led by specialized machinery, measuring instruments, and integrated circuits. Overall, total trade grew by 3.4 percent in March, following a 4.6 percent increase in February.

The Ministry of Trade and Industry’s recent downward revision of GDP forecasts aligns with concerns in the private sector, as businesses report delays in investments and reductions in inventories. A survey by the Singapore Business Federation found that 65 percent of firms expect trade conditions to worsen in the second quarter, with many bracing for higher input costs due to tariffs.

DBS Bank senior economist Chua Han Teng emphasized that any downward adjustment to Enterprise Singapore’s export forecasts should align with the weaker 2025 GDP growth projections.

The World Trade Organization (WTO) has also revised its global trade outlook, now expecting world merchandise trade volume to contract by 0.2 percent instead of the 2.7 percent growth predicted in January.

Mr. Chua noted that the WTO has already adjusted its forecast for global trade volumes due to the sweeping tariffs, retaliatory measures, and ongoing uncertainty. The WTO now expects a contraction of 0.2 percent in world merchandise trade, rather than the previous forecast of a 2.7 percent expansion.

On April 14, the Ministry of Trade and Industry lowered its full-year 2025 GDP growth forecast to a range of 0 percent to 2 percent, down from the previous forecast of 1 percent to 3 percent. Other analysts have also revised their Nodx forecasts for 2025.

Barnabas Gan, Group Chief Economist at RHB Bank, lowered his full-year growth projection to zero percent, citing downside risks, from a previous forecast of 2 percent. OCBC Bank’s Chief Economist, Selena Ling, cut her 2025 Nodx forecast to a range of minus 1 percent to 1 percent, down from the previous range of 2 percent to 4 percent.