Singapore Is Warning of a Recession: Here’s What to Look For

 1. After a better-than-expected start to 2025, the government is warning of a growing risk that the economy may slip into its first technical recession since the pandemic.

2. Beh Swan Gin, permanent secretary at the trade ministry, emphasized that such a contraction — defined as two consecutive quarters of contraction — “doesn’t necessarily equate to a full-blown economic recession.” The government maintained its full-year growth forecast at a cautious 0% to 2%.

3. As the impact of the US-led tariff escalation begins to bite, Singapore is the first Southeast Asian country to flag the risk of a technical recession, an event that has only happened twice in the past 20 years — at the start of the Covid-19 pandemic in 2020, and during the global financial crisis, when the city-state had four straight quarterly contractions beginning in June 2008.

4. The newly re-elected government of Prime Minister Lawrence Wong is already spending billions of dollars in subsidies and handouts to help households cope with the rising cost of living and create more jobs. But with such a high dependence on global trade, the nation’s economic path this year is likely to be dictated by the unpredictable trade battle between the US and China.

Should investment promotion agencies focus more on attracting research, development, and innovation?

 1. While tariffs (or the risk of them) dominate headlines, and governments and companies globally fret about the consequences, one simple and obvious fact is worth remembering: tariffs only affect physical goods. Although some services trade and investment will get caught up in the turmoil, the same does not hold true for most cross-border investment into research, development, and innovation (RD&I). RD&I activities involving sensitive technologies may be subject to outbound FDI screening, such as the US Outbound Investment Security Program. Otherwise, companies remain free to conduct research (almost) anywhere in the world.

2. For many investment promotion agencies (IPAs), attracting manufacturing investment remains the ultimate prize. ‘The bigger, the better’ still applies for the investment that many IPAs seek to attract. Large manufacturing projects are prioritized because of their job creation and supply chain impacts and potentially transformative nature.

3. However, manufacturing’s share of global FDI has been declining for decades and represented only 13% of greenfield projects globally between 2020 and 2023 (source: UNCTAD). At the same time, corporate expenditures on R&D have been growing rapidly, with data from the World Intellectual Property Organization (WIPO) showing an increase of roughly 40 percent between 2019 and 2023. In most countries, corporate R&D now significantly exceeds R&D spending by governments and academia, reflecting the importance of innovation for companies of all sizes.

Malacca Emerges as Malaysia’s Electric Vehicle Manufacturing Hub

1. Malacca is stepping into the spotlight as one of Malaysia’s most promising electric vehicle (EV) manufacturing hubs. With billions in investment commitments, growing local job creation, and government-backed incentives, the state is positioning itself as a key driver of Malaysia’s green mobility ambitions under the National Energy Transition Roadmap (NETR).