The Monetary Authority of Singapore (MAS) expects global economic activity will slow in 2H2025, with inflation “dampened” for the year, says managing director Chia Der Jiun at the release of MAS’s latest annual report on July 15.

Singapore’s GDP growth has “held up better than expected” in 1H2025, but is likely to slow in 2H2025, in line with MAS’s forecasts for slowing global economic activity and external demand, adds Chia.

“In 2H2025, we expect tariffs to hit production and exports with a lag, especially when the boost from front-loading dissipates,” says Chia in his prepared remarks. “Forward-looking surveys of businesses indicate cautious business sentiments and are consistent with this softening outlook.”

Overall, Singapore’s GDP growth is “expected to be subdued” over the remainder of the year, Chia adds.

In response to The Edge Singapore, MAS’s chief economist Edward Robinson reaffirms his forecast for core inflation to average between 0.5% and 1.5% in 2025.

“Imported inflation is rather subdued and in terms of domestic costs, certainly, we have come out of the tightness of the past few years and [are] averaging, for most categories, below historical trends,” says Robinson.

Whether or not these continue to next year depends on the global macro environment and a combination of external factors, he adds. “Our tentative projection is for low and stable inflation to continue into 2026.”

Overall, core inflation “should remain subdued” with a resurgence of underlying price pressures “unlikely”, says Chia. “We are alert to risks on both sides. Disinflationary impulses could be stronger if the impact of tariffs on economic activity is more severe; while inflationary pressures could re-surface if geopolitical conflict or supply chain dislocations or disruptions escalate.”

At this juncture, the impact of tariffs and uncertainty have yet to assert in a major way, says Chia, and “considerable uncertainty remains”. “The outlook ahead is subject to a wider than usual range of outcomes; there is a range of possibilities around the extent and scope of tariffs, whether trade agreements are concluded and prove to be durable, and whether escalating trade conflicts recur.”

Chia adds: “MAS’s mandate to secure medium-term price stability will provide an anchor of stability for the Singapore economy in these times of uncertainty and fundamental change.”