Insights 
VT 
Singapore’s non-oil domestic exports decreased by 3.5% year-on-year in May, defying expectations of an 8.0% rise. This decline follows a 12.4% increase observed in April.
While there was an increase in exports to Taiwan, Indonesia, South Korea, and Hong Kong, exports to the United States, Thailand, and Malaysia fell. As a result, Singapore has reduced its GDP forecast for 2025.
New GDP Forecast
The new estimated growth range is between 0% and 2%, a decrease from the prior forecast of 1% to 3%.
The figures released this morning point to a downward shift in expected trade performance—something that was not in alignment with earlier forecasts. A 3.5% yearly drop in non-oil domestic exports, particularly after a sharp 12.4% rise the month before, introduces a measure of doubt over the strength of external demand moving into the second half of the year.
The adjusted GDP estimate, now ranging from zero to two percent for 2025, indicates a reassessment of economic momentum. This lower bracket reflects not just external trade headwinds, but also suggests subdued domestic activity. The original forecast, at a more optimistic one to three percent, underestimated how quickly global conditions could shift.
Exports to Taiwan, Indonesia, South Korea, and Hong Kong did see an uptick—but this was not enough to offset drops seen in key partners like the United States, Thailand, and Malaysia. The weakening in US-bound shipments stands out given its usual steadiness. Simultaneous contraction in Thailand and Malaysia-bound exports hints at deeper regional softness, possibly tied to slower production cycles or tightened spending patterns.
For those watching the metrics closely, this uneven performance across regions offers a clearer path forward. Short-term strategies must account for thinning export margins, particularly in electronics and precision instruments. These areas often see sharper swings and are sensitive to marginal changes in demand across Asia and North America.
Interest Rate And Currency Implications
That divergence in export destinations means it’s not just about total numbers, but also where trade is flowing. We are likely to see positioning shift in response—away from assumptions of a uniform global recovery, towards more selective, country-specific indicators.
The weaker-than-anticipated export data, combined with the reined-in GDP outlook, implies macro headwinds may persist through the next few quarters. That should inform our view on interest rate expectations, as well as hedging decisions. It also shines a light on currency sensitivity, with the Singapore dollar possibly under quiet pressure if trade conditions don’t improve.
We’ve typically seen such data revisions precede changes in implied volatility along SGD pairs, especially during periods of bucking market consensus. That should shape how we look at risk premiums in the near term, with any positioning on the curve taking into account expanded downside possibilities.
Markets may have to reevaluate some of their growth assumptions for Asia. The recent increase in trade with smaller partners does not yet compensate for lower volume with the larger ones. Short-dated contracts tied to growth benchmarks should be viewed through this adjusted lens—lower central growth scenarios now carry more weight.
Volume tapering in certain segments is already visible, and that loss of momentum may translate into re-pricing across specific derivative structures, especially those sensitive to headline GDP trends. We should be wary of relying on April’s strong performance as a guide without factoring in May’s reversal.
Overall, it’s a shift from relatively clean trade signals to a more jagged sequence of data points, which will need to be reflected in shorter-term adjustments while longer positioning gets recalibrated.
