With the outlook for the trade-dependent city-state clouded by US tariffs, Singapore's central bank further loosened its monetary policy on Monday, its second such action this year.
Following advance data showing GDP dropped a seasonally adjusted 0.8 percent in the first quarter, the government reduced Singapore's 2025 growth target to zero percent to two percent from one percent to three percent before, citing a much weaker external demand outlook.
Given that its foreign trade outpaces its domestic economy, Singapore, one of the most open economies in the world, is frequently regarded as a barometer of global expansion.
The central bank stated that as asset markets begin to reflect uncertainties in the global economy, global financial conditions have tightened and that exporting nations affected by tariffs will experience less demand and pressure to reduce the prices of their output.
Given the central bank's dovish language, economists stated they would not rule out another easing in the second part of the year if economic circumstances worsen.
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In order to "leave some ammunition in the pocket" and avoid overreacting, OCBC economist Selena Ling stated that MAS was still letting the S$NEER rise "because a lot of the external uncertainties are tariff induced and the flip-flop announcements continue, so the eventual magnitude of the hit on growth and inflation remains elusive."