The Monetary Authority of Singapore (MAS) is expected to ease its monetary policy at the upcoming meeting, according to a recent analysis by ING. The forecast is driven by a projected slowdown in Singapore’s GDP growth in the second half of 2025, compounded by ongoing tariff uncertainties and a persistent overvaluation of the Singapore dollar.
ING’s report highlights that Singapore’s GDP growth exceeded expectations in the second quarter, accelerating to 4.3% year-on-year, surpassing the consensus forecast of 3.6%. Despite this strong performance, ING anticipates a slowdown in the latter half of the year as global demand softens. The Singapore dollar’s continued appreciation against the US dollar has pushed its overvaluation to new highs, further supporting the case for policy easing.
The report notes that whilst the electronics and broader manufacturing sectors have remained resilient, uncertainty around global supply chains may impact investment decisions. Additionally, despite a robust labour market, consumer trends are weakening, with retail consumption slowing across most sectors.
Deepali Bhargava, ING’s Regional Head of Research for Asia-Pacific, emphasises the significant downside risks from external factors, stating, “Despite Singapore maintaining the baseline tariff rate of 10%, these risks have not abated.” The analysis suggests that reducing the slope of the Singapore dollar nominal effective exchange rate (SGD NEER) band to zero could be a prudent move.
As Singapore navigates these economic challenges, the MAS’s decision on monetary policy will be closely watched, with potential implications for the country’s economic trajectory in the coming months.
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