Singapore’s economic outlook is tilting towards a potential easing of monetary policy in January 2026, according to UOB Global Economics and Markets Research. The bank’s latest macro note suggests a 55% probability of easing at the Monetary Authority of Singapore’s (MAS) January meeting, compared to a 45% chance in October 2025. This forecast is based on resilient trade indicators and a modest GDP growth projection of 0.5% quarter-on-quarter for Q3 2025.
Trade-related indicators for July and August have shown resilience, despite the impact of US tariffs. Non-oil re-exports remained robust, although there was a decline in momentum due to fading tailwinds from earlier front-loading. The bank has revised its 2025 growth forecast to 2.7%, up from a previous 2.2%, exceeding the Ministry of Trade and Industry’s range of 1.5% to 2.5%.
Inflation remains below historical averages, with core inflation projected at 0.5% for 2025 and 1.1% for 2026. UOB notes that monetary conditions have already eased, as reflected in the decline of the three-month compounded Singapore Overnight Rate Average (SORA) and the Singapore Dollar Nominal Effective Exchange Rate (S$NEER) position within the policy band.
The note also highlights potential risks from US tariffs on pharmaceuticals and electronic devices, which could affect Singapore’s exports. However, exemptions may apply to pharmaceutical firms with existing US investment plans. The situation underscores the complex dynamics of Singapore’s trade relationships and the potential impact on its economic growth trajectory.
