Singapore’s Budget 2025 is likely to strike a balance between short and long-term goals for the country, say RHB Bank Singapore economists Barnabas Gan and Laalitha Raveenthar in a Feb 10 report.
These goals will centre on four key areas, job security and cost of living, economic resilience, social cohesion and sustainability.
First steps
High living costs and job security remain top concerns for Singaporeans. The budget is expected to introduce measures to alleviate financial strain on households, particularly lower and middle-income groups. “We foresee policymakers increasing u-save rebates in this budget to help offset rising utility costs,” the analysts write. Enhancements to the assurance package, including Community Development Council (CDC) vouchers and cash supplements, are also anticipated to provide immediate relief.
On the employment front, they note that the government will double down on upskilling initiatives to ensure workers remain adaptable in a rapidly changing economy. The SkillsFuture programme, a cornerstone of Singapore’s workforce development strategy, is expected to see further enhancements.
“We anticipate this year’s budget might further enhance the existing initiatives, especially the SkillsFuture Level-Up programme targeting mid-career Singaporean workers.” Measures such as increased training allowances and industry-specific reskilling programmes will help workers transition into growing sectors like technology and sustainability.
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Meanwhile, Singapore’s small and medium-sized enterprises (SMEs), which account for 99% of businesses and 72% of the workforce, will also be a key focus of budget 2025. With global trade tensions and rising costs posing challenges, the budget is expected to introduce measures to support SMEs in adopting digital and automation solutions.
On this, Gan and Raveenthar note: “We expect extension and enhancements of schemes like Career Conversion Programmes (CCPs) and SkillsFuture Enterprise Credit to help alleviate the financial pressures of rising manpower costs for businesses.”
Tax incentives for businesses investing in new technologies and sustainability initiatives will also feature prominently. These measures aim to level the playing field for SMEs, enabling them to compete globally while reducing their reliance on external markets affected by trade disputes.
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“While we look for Singapore to see a resilient economic year in 2024, some aid may still be needed for specific industries due in part to the impact of global economic headwinds on outward-oriented sectors such as wholesale trade, information technology services and manufacturing. Hence, we anticipate that targeted business support for these sectors may be introduced.”
Wider goals
As Singapore celebrates its 60th year of independence (SG60), Gan and Raveenthar see that the budget could likely include measures to strengthen social cohesion and support families across different life stages. A special SG60 bonus, similar to the one-off SG50 bonus of $500 given to civil servants in 2015, is anticipated. “We think a special SG60 bonus might be introduced, similar to the one-off SG50 bonus of $500 given to all civil servants in conjunction with the country’s golden jubilee celebration in 2015.”
They continue: “This year, there is an increased likelihood that the government will raise the allocation for special transfers to the public. Based on our budget estimates, the total special transfer distribution could reach up to $4.0 billion, similar to the amount disbursed ($4.4 billion) during SG50 in 2015.”
Support for seniors and caregivers will also be a priority, with extensions of existing schemes like the Senior Employment Credit and Part-time Re-employment Grant expected. These initiatives align with broader efforts to raise retirement and re-employment ages, ensuring seniors can “age with dignity and purpose.”
One goal that will also take centre stage in budget 2025 is sustainability, as Singapore seeks to position itself as a regional hub for green finance and innovation.
The focus will be on developing talent, boosting productivity, and leveraging emerging trends in technology and sustainability, positioning Singapore as a trusted hub for businesses, innovation, and talent. The budget is expected to introduce new or expanded support for green financing, enabling businesses to invest in renewable energy, clean technologies, and carbon reduction initiatives.
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“To accelerate sustainable projects, we expect Budget FY2025 to introduce new or expanded support for green financing, helping businesses secure capital for investments in renewable energy, clean technologies, and carbon reduction initiatives,” write Gan and Raveenthar.
Public-private partnerships in research and development (R&D) for green technologies will also be encouraged, with grants and tax incentives aimed at accelerating the transition to a circular economy. “We expect the budget could offer additional financial support for companies transitioning from Industry 4.0 to Industry 5.0, including grants for R&D or pilot projects.”
Singapore’s fiscal position
Singapore’s fiscal position remains strong, with an estimated surplus of 0.8% of gross domestic product (GDP) in 2024, driven by robust revenue collection from corporate income taxes, personal income taxes, and GST. However, 2025 is expected to see a deficit of 0.8% of GDP, reflecting the government’s commitment to a balanced budget over its five-year term. Gan and Raveenthar write: “We anticipate a fiscal deficit of $6.6 billion or 0.8% of GDP in 2025, which will appropriately reflect the balanced budget approach in Singapore over the current five-year term.”
This deficit, they note, is not a sign of fiscal weakness but rather a strategic allocation of resources to address immediate needs while investing in long-term priorities.
Economic outlook for 2025
The analysts expect Singapore’s economy to grow by 3.0% in 2025, down from 4.0% in 2024, as global trade tensions and geopolitical risks weigh on external demand. Inflation, they note, is expected to moderate, with headline and core consumer price index (CPI) forecast at 2.3% and 1.8%, respectively. “We maintain our headline CPI forecast at 2.3% this year, driven by both external and domestic factors.”
Gan and Raveenthar continue: “We keep our medium-term optimistic outlook, driven by robust manufacturing and services-producing activities in Singapore. We expect Singapore to see a resilient GDP prognosis from a sanguine global trade and investment outlook.”
On the effects of US president Donald Trump’s second tenure as president, the analysts anticipate moderate supply chain disruptions in the inflation landscape, primarily confined to the US. However, the slowdown in US-driven external demand is expected to keep commodity prices in check, preventing significant inflationary pressures across Asean.
“Looking ahead, we project a further deceleration in headline and core inflation, with rates decreasing from 2.4% and 2.7%, respectively, in 2024. Meanwhile, US-centric tariff measures and the potential elevated supply chain congestion could inject upside risks into Singapore's inflation climate,” add the analysts.
Furthermore, unforeseen events like heightened geopolitical tensions or unexpected oil supply cuts by producing nations may drive up commodity prices and increase imported costs, pushing the energy prices higher.
The analysts also understand that the Monetary Authority of Singapore (MAS) is likely to maintain its current policy stance, with the Singapore dollar nominal effective exchange rate (S$NEER) appreciating at a modest gradient of 1.0%. “While a re-inflationary environment has risks, we expect Singapore's economy to stay resilient, with core inflation stabilising around 1.8% in 2025.”
The RHB analysts conclude: “While we remain optimistic about Singapore's economy, we are still cognizant of key risks, including global geopolitical uncertainties and a potential rise in US protectionist policies, which may curtail global growth and trade activities this year.”
