Singapore may need to reassess its economic outlook as escalating tensions in the Middle East threaten to drive up global energy prices, Deputy Prime Minister and Minister for Trade and Industry Gan Kim Yong said in Parliament on Monday (2 Mar).
Although Singapore’s economy performed better than expected last year, Mr Gan cautioned that the global environment has grown increasingly complex.
A prolonged conflict, he warned, could weigh on both global growth and Singapore’s domestic economy.
Despite these challenges, he stressed that Singapore must press ahead with long-term transformation, outlining Singapore’s plans to secure its next phase of growth.
Source: MDDI Singapore on YouTube
Mr Gan noted that concerns have mounted following the closure of the Strait of Hormuz — a key shipping route for crude oil and liquefied natural gas (LNG).
The disruption comes amid heightened conflict involving the United States, Israel, and Iran.
“In the near term, this could result in an increase in global energy prices,” Mr Gan said.
Source: QTV Gambia on Facebook, for illustrative purposes only
“Depending on how protracted the conflict is, higher energy prices could lead to higher costs for businesses and consumers, and weigh on the global and Singapore economies.”
He added that the Government is closely monitoring developments and stands ready to reassess Singapore’s GDP growth and inflation forecasts if necessary.
Beyond the Middle East crisis, Mr Gan highlighted continued volatility in global trade policy.
Although the US Supreme Court struck down “reciprocal” tariffs imposed last year, the US administration has since replaced them with a new Section 122 tariff of 10% for up to 150 days.
US President Donald Trump has also indicated he may raise this to 15%.
Source: @realDonaldTrump on Truth Social
With details still unclear, Mr Gan described the environment as “unpredictable and uncertain”, adding that Singapore is working with tripartite partners to help businesses and workers navigate the uncertainty.
He also pointed to longer-term structural shifts reshaping the economy:
“All these make sustaining growth and creating good jobs more challenging,” he said.
In response, the Government has set up an Economic Strategy Review (ESR) to reset Singapore’s economic strategy for the next phase of development.
The aim is to reach the higher end of Singapore’s projected 2-3% annual GDP growth over the next decade, and ensure growth translates into good jobs.
Mr Gan outlined five key strategic thrusts underpinning Singapore’s next growth chapter.
First, Singapore will deepen its leadership in advanced manufacturing — including semiconductors, aerospace, and medical technology — while expanding into emerging areas such as quantum technology, decarbonisation, and space industries. The aim is to anchor more high-value and high-skilled jobs locally.
Second, the Government will continue strengthening the enterprise ecosystem by supporting both multinational corporations and promising local firms, positioning Singapore as a launchpad for globally competitive companies.
Third, artificial intelligence will be a major driver. Initiatives such as the “Champions of AI” programme and sector-specific AI missions will help businesses integrate AI, reskill workers, and raise productivity.
Source: Tech in Asia on Facebook, for illustrative purposes only
Fourth, companies facing structural shifts will receive support to restructure, transform, or expand overseas where necessary, ensuring they remain competitive in a changing world.
Finally, Singapore will deepen global connectivity and step up support for overseas expansion, particularly into emerging markets, while keeping strategic functions and quality jobs anchored at home
“Even as we grow our economy, our competitiveness will depend not only on innovation, but also on the ability of our businesses to adapt, reposition, and transform,” Mr Gan said.
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Featured image adapted from MDDI Singapore on YouTube and QTV Gambia on Facebook. Right image for illustrative purposes only.