Bank of America Global Research (BofA) has raised its GDP growth projections for Singapore, Malaysia and Vietnam following a sharp cut to forecasts in April. Still, the latest projections are below BofA’s forecasts issued in November 2024.
In a July 1 report, BofA revised their 2025 and 2026 growth forecasts for Asean, raising Singapore’s 2025 projected GDP to 1.8% from 1.4% in April and 2.6% in November 2024.
Singapore’s 2026 projected GDP has also been revised higher to 2.0% from 1.7% in April and 2.6% in November 2024.
Meanwhile, the team of BofA analysts also raised Malaysia, Indonesia and Vietnam’s 2025 GDP growth forecasts to 4.4%, 4.9% and 6.9% respectively, while keeping their outlook unchanged at 5.5% for the Philippines and a slightly lower 1.6% for Thailand from 1.7% previously.
Singapore has seen an upswing in re-exports to the US in recent months, say research analyst Jojo Gonzales and economists Rahul Bajoria, Ang Kai Wei and Pipat Luengnaruemitchai.
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“In the case of Singapore, evidence of frontloading was most obvious for re-exports (which surged by almost 80% over March and May), rather than domestic exports (which fell by almost 20%),” writes the team.
The analysts note a “more modest” rebound for Singapore’s purchasing managers’ index (PMI), which is used as an indicator of economic health for sectors such as manufacturing.
With regards to inflation, BofA notes that Asean should see low underlying inflation due the absence of strong domestic demand pressures amid ongoing uncertainties.
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Singapore’s core inflation should average 0.7% in 2025 and 1.3% in 2026, says BofA. “We expect momentum to be dampened by soft domestic demand and price hikes for administered measures [to be] likely smaller compared to past years.”
The Monetary Authority of Singapore (MAS) is “not necessarily in a hurry” to flatten the slope and steer the nominal effective exchange rate lower if it sees the real effective exchange rate to be broadly stable rather than appreciating in the past few months.
“With core inflation likely to stay below historical average of 1.5% to 2% for some time, we expect MAS to ease policy settings for the third straight meeting in July and maintain the resultant flat slope for an extended period,” writes the team.
