- Favourable economic growth prospects amid resilient external demand.
- Inflation will likely moderate further, moving closer to the pre-pandemic 2010-2019 average.
- SGD NEER policy band can reduce its appreciation pace on core inflation declining below 2%.
- Intensification of geopolitical and trade tensions is the biggest downside risk to our outlook.
- USD/SGD to hold above 1.35 in 1H25; Downside to rates to be constrained by a murkier Fed cut path.
Below is a summary; For full report with detailed charts, please download the PDF
The world is facing increasing volatility and uncertainty. As Singapore navigates the next phase of its economic development, it will do so within a global economic landscape marked by heightened geopolitical tensions, rapid technological disruption, and climate change. The worsening geopolitical tensions stem from ongoing regional conflicts and intensifying US-China rivalry, with the degree of escalation under Trump 2.0 being uncertain. Singapore has nonetheless successfully steered through multiple crises and challenging periods during its nearly 60 years of independence. The island-nation continues to be perceived by foreign investors as a beacon of economic stability, a highly trusted and vibrant global business hub, and a reputable international finance centre. In our view, Singapore’s economy is poised to remain dynamic in a volatile world in 2025.
We anticipate five key themes for 2025: 1) We expect favourable growth prospects for Singapore’s economy, barring unexpected significant global negative shocks. 2) A new dawn is on the cards for the Johor-Singapore Special Economic Zone (JS-SEZ). 3) Inflation will likely moderate further, moving closer to the pre-pandemic 2010-2019 average. Regarding policies, 4) the government’s focus will continue to be anchored by the Forward Singapore (Forward SG) agenda, with some fiscal room to balance these long-term initiatives with near-term issues. 5) Lastly, we see scope for the Monetary Authority of Singapore (MAS) to slightly reduce the appreciation pace of the SGD NEER policy band in 2025, but the timing hinges on core inflation’s progress back into its historically comfortable range. Regarding financial markets, we see USD/SGD pushing above 1.35 in the first half of 2025, while the downside to SGD rates will be constrained by a murkier US Fed cut path.
Key Economic Themes
- Favourable economic growth prospects amid resilient external demand.
- New dawn for Johor-Singapore Special Economic Zone.
- Inflation will likely moderate further, moving closer to the pre-pandemic 2010-2019 average.
- Fiscal policy to balance between Forward SG agenda and near-term issues.
- SGD NEER policy band can reduce its appreciation pace on core inflation declining below 2%.
To read the full report, click here to Download the PDF.
Subscribe here to receive our economics & macro strategy materials.
To unsubscribe, please click here.
Topic
Explore more
E & S FocusGENERAL DISCLOSURE/ DISCLAIMER (For Macroeconomics, Currencies, Interest Rates)
The information herein is published by DBS Bank Ltd and/or DBS Bank (Hong Kong) Limited (each and/or collectively, the “Company”). It is based on information obtained from sources believed to be reliable, but the Company does not make any representation or warranty, express or implied, as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained herein does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. The information herein is published for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate legal or financial advice. The Company, or any of its related companies or any individuals connected with the group accepts no liability for any direct, special, indirect, consequential, incidental damages or any other loss or damages of any kind arising from any use of the information herein (including any error, omission or misstatement herein, negligent or otherwise) or further communication thereof, even if the Company or any other person has been advised of the possibility thereof. The information herein is not to be construed as an offer or a solicitation of an offer to buy or sell any securities, futures, options or other financial instruments or to provide any investment advice or services. The Company and its associates, their directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking or financial services for these companies. The information herein is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident of or located in any locality, state, country, or other jurisdiction (including but not limited to citizens or residents of the United States of America) where such distribution, publication, availability or use would be contrary to law or regulation. The information is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction (including but not limited to the United States of America) where such an offer or solicitation would be contrary to law or regulation.
[#for Distribution in Singapore] This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) which is Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 65-6878-8888 for matters arising from, or in connection with the report.
DBS Bank Ltd., 12 Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore 018982. Tel: 65-6878-8888. Company Registration No. 196800306E.
DBS Bank Ltd., Hong Kong Branch, a company incorporated in Singapore with limited liability. 18th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
DBS Bank (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability. 11th Floor, The Center, 99 Queen’s Road Central, Central, Hong Kong SAR.
Virtual currencies are highly speculative digital "virtual commodities", and are not currencies. It is not a financial product approved by the Taiwan Financial Supervisory Commission, and the safeguards of the existing investor protection regime does not apply. The prices of virtual currencies may fluctuate greatly, and the investment risk is high. Before engaging in such transactions, the investor should carefully assess the risks, and seek its own independent advice.