GDP may fall 3% as trade exposure grows: KPMG

The report projects that Singapore’s GDP growth may decline by as much as 3%.

Singapore’s export-driven economy could face a sharp slowdown and risk tipping into recession by early 2026, according to KPMG’s latest Global Economic Outlook.

The report projects that Singapore’s GDP growth may decline by as much as 3%, citing the country’s extreme dependence on global trade. Exports account for nearly 190% of Singapore’s GDP, making the economy particularly vulnerable to geopolitical shocks and rising global protectionism.

The report highlighted that Singapore, along with Hong Kong, is disproportionately affected by trade disruptions stemming from escalating geopolitical tensions. Rising tariffs, new trade restrictions, and instability in key shipping routes such as the South China Sea are contributing to what KPMG describes as a growing wave of “de-globalisation.”

In response, KPMG recommends that Singaporean businesses adopt a “pause and prepare” strategy, delaying major investments whilst re-evaluating supply chains and building operational resilience.

The report also encouraged firms to explore diversification in trade partnerships, invest in digital infrastructure, and strengthen domestic market capacity to reduce reliance on external demand.

KPMG notes that while geopolitical risk has traditionally been viewed as a background factor, it now requires direct strategic attention.

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