Singapore not revising GDP outlook even if US-China talks are ‘encouraging’: DPM Gan

[SINGAPORE] Despite the US tariff pause and ongoing talks on pharmaceutical rates, Singapore is not further revising its growth projection for now, amid heightened global uncertainty, Deputy Prime Minister Gan Kim Yong said on Friday (May 16).

“The fact that the US and China are at the discussion table is encouraging, but it’s too early to tell what the outcome will be, and the uncertainty remains,” he said at a doorstop at the Singapore Economic Resilience Taskforce (Sert), which he chairs.

So while the talks are encouraging, Singapore must “exercise caution”, he added. Singapore downgraded its full-year growth outlook to 0 to 2 per cent last month, from an earlier projection of 1 to 3 per cent.

The task force was set up shortly after US President Donald Trump unleashed his “Liberation Day” tariffs on Apr 2, with a 10 per cent baseline duty and higher reciprocal tariffs for some countries. A week later, a 90-day pause was introduced for the latter.

DPM Gan, who is also trade and industry minister, noted that tariff uncertainty is causing businesses to hold back on investment and hiring decisions.

“The slowdown in investment will also result in the slowdown of the global economy and domestic economy,” he said.

US tariffs on China imports were cranked up to 145 per cent at their peak, then slashed to 30 per cent for a 90-day period, following a May 14 meeting between Trump and Chinese President Xi Jinping in Geneva.

DPM Gan noted that some companies may be front-loading exports during this 90-day window, leading to a short-term boost. Singapore’s non-oil domestic exports surged 12.4 per cent in April, Enterprise Singapore data showed on Friday.

Yet this is “really no consolation”, said DPM Gan, as it merely represents “advance sales”, and exports and production will eventually slow down.

Negotiations with the US

DPM Gan also gave an update on Singapore’s negotiations with the US, which are centred on sectoral tariffs – chiefly for pharmaceutical exports, though the US has also indicated plans for semiconductor tariffs.

The US has offered to discuss “some form of concession for Singapore to have an official preferential tariff, even to the extent of zero tariff, for pharmaceutical exports to the US”, he said.

In exchange, Singapore may have to ensure “a smoother flow of goods” and the “security of supply chains”, he added. He did not give details, citing the confidential nature of the discussions.

This is a “significant opportunity” as pharmaceuticals remain a key part of Singapore’s exports to the US – but the negotiations are likely to be a “fairly long journey” due to the high level of details involved, he warned.

There are also discussions on semiconductors, but “the details are not available yet”, he added.

“They are happy to discuss with Singapore how we can ensure continued supply, and the reverse is also important – that they are also keen to see how they continue to supply Singapore with semiconductor technology so that we will support our digital economy or semiconductor industries.”

Support measures for businesses

DPM Gan gave an overview of Sert’s three key areas of work: information, engaging businesses and longer-term strategy.

The task force has been speaking to both multinational corporations and smaller companies to prepare them for the tariff impact and learn how to better support them.

DPM Gan said the task force has started working on potential support measures that can be rolled out “when the situation warrants it”.

These include enhancements to schemes in Budget 2025, such as the Market Readiness Assistance Grant for going overseas; financing schemes with local banks; and job creation efforts.

Asked what the tipping point for such a roll-out would be, the minister said there is no specific index being watched, but the task force is monitoring “the overall development of the global situation, as well as the domestic and economic situation”.

There may be both broad-based measures to help the economy as a whole, and “very targeted measures” for affected sectors, he added.

For example, some companies that export directly to the US could see orders slowing down, and may thus need more capital since payments may be dragged out.

New task force members?

With a Cabinet reshuffle imminent after the May 3 general election, DPM Gan did not rule out the possibility that the line-up of the task force could change.

“We may need to make some adjustments to the membership, because the membership is taken from ministers with a specific portfolio,” he said.

Besides DPM Gan, the task force comprises four other ministers and three tripartite representatives – one each from the Singapore Business Federation, the National Trades Union Congress and the Singapore National Employers Federation.