Demand for S’pore goods, services set to fall as global growth weakens

SINGAPORE – The recent tariffs imposed by the US on its trading partners globally will hurt the Singapore economy, businesses and workers, and potentially lead to a recession in 2025, Prime Minister Lawrence Wong said in Parliament last week.

“Singapore may or may not go into recession this year. But I have no doubt that our growth will be significantly impacted,” he said during a ministerial statement delivered on April 8.

Local stocks plunged 8.2 per cent during the week despite some respite on April 9, when President Donald Trump announced that the

US would pause reciprocal tariffs on imports from 60 trading partners,

less than 24 hours after the duties went into effect.

China, which retaliated with an 84 per cent tariff on US goods on April 9, was excluded from the pause. Its latest duties on US imports came into effect on April 10, the same day the White House clarified that Mr Trump’s previously announced 125 per cent tariff against China

 is actually 145 per cent, after including a 20 per cent tariff on fentanyl.

Singapore’s Straits Times Index (STI) closed the week at 3,512.53 points on April 11, after suffering its worst day since the 2008 global financial crisis on April 7, when it dropped by more than 8.5 per cent.

Since then, Mr Trump has granted reciprocal tariff exemptions for smartphones, computers and some other electronics imported largely from China, providing a big break to tech firms, such as Apple, that rely on imported products.

In an April 12 notice to shippers, the US published a list of 20 product categories excluded from the import taxes. It featured 20 product categories, including all computers, laptops, disc drives and automatic data processing. It also included semiconductor devices, equipment, memory chips and flat panel displays.

The move also excludes the specified electronics from a 10 per cent baseline tariff on goods from most places other than China, easing import costs for semiconductors from Taiwan and iPhones produced in India.

No explanation was given for the move, although it implies that people in Singapore may not have to pay more to buy iPhones and other Apple products as earlier feared, at least for now.

Slower growth ahead

Nevertheless, global growth is expected to be weaker in the coming months, which means external demand for Singapore’s goods and services will fall, PM Wong said in his April 8 ministerial statement in response to Mr Trump’s April 2

announcement of a suite of universal tariffs on America’s trading partners.

A 10 per cent baseline tariff on Singapore goods to the US went into effect on April 5, defying a free trade agreement between the two countries and despite Singapore buying more from the US than the US does from Singapore.

PM Wong pointed out that if the tariffs were truly meant to be reciprocal, and meant to target only those with bilateral surpluses, the tariff for Singapore should be zero.

“We are very disappointed by the US’ move, especially considering the deep and longstanding friendship between our two countries. These are not actions one does to a friend,” he said.

PM Wong warned that outward-oriented sectors in Singapore – like manufacturing, wholesale trade and transport – will bear the brunt of the tariff impact. “Slower growth will mean fewer job opportunities and smaller wage increases for workers. And if more companies face difficulties or relocate their operations back to the US, there will be higher retrenchments and job losses,” he said.

PM Wong added that measures announced under Budget 2025 will provide short-term support for the economy, and a new task force led by Deputy Prime Minister Gan Kim Yong will help address immediate uncertainties.

Banks among the losers

Since April 2, the three local banks were among the hardest hit as a result of the stock market rout that took place in response to Mr Trump’s tariffs, with DBS falling by almost 10 per cent at one point.

However, some stocks managed to stage a small rebound last week, with DBS up 2.8 per cent at $39.13, while UOB rose 4.6 per cent to close the week at $32.47. However, OCBC was down by just over 4 per cent, closing April 11 at $15.01.

During the week, details of the US Federal Reserve’s mid-March meeting were released. The minutes showed that while Fed officials are worried that Mr Trump’s tariffs could deal a blow to economic growth, they are nevertheless not in a hurry to cut interest rates because they expect higher tariffs to boost inflation. 

Venture Corporation was among the biggest losers on the STI last week.

The company, which runs its operations globally, including in the US, closed April 11 at $10.69, down almost 9 per cent during the week.

Sats was also among the losers on the STI, despite rising by almost 10 per cent after the 90-day pause was announced.

The air cargo and catering company was down 6.5 per cent during the week as traders globally scrambled to reconfigure their supply chains and logistics arrangements, and closed at $2.61.

CDL cuts Kweks’ pay

City Developments Limited released its 2024 annual report on April 8.

In it, the property developer revealed that its chief executive Sherman Kwek and executive chairman Kwek Leng Beng both received lower compensation for the year,

following a boardroom feud that led to a decline

in the property developer’s share price.

Mr Sherman Kwek voluntarily elected to forgo his long-term incentive grant of $1.35 million for 2024, resulting in a total remuneration of $2.97 million for the year,

down 15.4 per cent from the $3.52 million he received in 2023.

His father, Mr Kwek Leng Beng, received $5.97 million in total compensation for 2024, a decrease of 13.6 per cent from $6.91 million in 2023.

This also came after CDL’s net profit for 2024 sank to $201.3 million from $317.3 million in 2023, while revenue tumbled to $3.3 billion in 2024, from $4.9 billion in 2023.

What to look out for this week

Singapore’s central bank will issue its second quarterly monetary policy statement of the year on April 14.

Economists expect the Monetary Authority of Singapore, which uses the exchange rate rather than interest rates to stabilise prices, to reduce the slope in the policy band of the Singapore dollar’s nominal effective exchange rate.

The slope guides the rate at which the Singapore dollar appreciates. If the slope is reduced, this means the currency will be allowed to strengthen at a slower pace. 

Also on April 14, the Ministry of Trade and Industry (MTI) will release advance gross domestic product (GDP) estimates for the first quarter of 2025.

MTI, which had originally projected GDP growth of 1 per cent to 3 per cent for 2025, is reassessing “and will likely revise it downwards”, PM Wong said.