SINGAPORE: Q1 Growth Below Forecasts, MAS Sees Downsides Risks To 2025 Outlook.

Along with the MAS monetary policy decision this morning we also had advanced Q1 GDP figures. They printed below expectations at -0.8%q/q, versus -0.4% forecast. The Q4 outcome from last year came in at +0.5%.

• In y/y terms, growth was 3.8%, against a 4.5% forecast and 5.0% prior. The best of the cyclical upswing in growth from 2023/2024 now looks to be behind us. Y/Y growth peaked at 5.7% in Q3 last year.
• In terms of the details, manufacturing growth fell to -4.9%q/q, while construction was -2.3%, and service a modest +0.3%q/q. All of these sub sectors were still positive in y/y terms.
• The MAS noted in its statement accompanying its monetary policy decision: "For 2025 as a whole, Singapore’s GDP growth is expected to slow to 0.0–2.0% from 4.4% last year. Given Singapore’s high trade dependency and deep integration with global supply chains, slowing global and regional trade as well as heightened policy uncertainty will weigh on the external-facing sectors, which could spill over into the domestic-oriented sectors. Consequently, the aggregate level of output will come in below the economy’s potential this year.  The external environment remains uncertain. There are downside risks to Singapore’s economic outlook stemming from episodes of financial market volatility and a sharper-than-expected fall in final demand abroad. "
• On inflation the central bank noted: " MAS Core Inflation is now forecast to average 0.5–1.5% in 2025, down from 1.0–2.0% in the January 2025 MPS. The downgrade reflects the lower-than-expected inflation outturns in Jan–Feb as well as an anticipated moderation in the pace of price increases amid the weakening economic outlook."
• This backdrop suggests further MAS easing can take place, potentially at the July policy meeting outcome, with the slope lowered at today's policy meeting but still positive.