Gan Kim Yong, Singapore’s deputy prime minister, during a panel session, at the World Economic Forum (WEF) in Davos, Switzerland, on Tuesday, Jan. 21, 2025. The annual Davos gathering of political leaders, top executives and celebrities runs from January 20 to 24.
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Singapore will likely see only a “limited” direct impact from U.S. tariffs as the country runs a trade deficit with the U.S., the country’s deputy prime minister said.
In 2024, the U.S. had a trade surplus with Singapore of $2.8 billion.
However, Gan Kim Yong, Singapore’s deputy prime minister and minister for trade and industry said that the city-state “cannot underestimate” the impact of tariffs in the longer term.
Speaking in an exclusive interview with CNBC’s “Squawk Box Asia,” Gan highlighted that companies could decide to change their production base. In turn, supply chains and trade patterns will shift, causing “greater friction and greater cost” in the global economy that may slow it down.
When asked if tariffs will affect Singapore’s growth projection, Gan said that Singapore does not take its economic forecast for granted and continually works towards meeting, or even exceeding, its target.
“We try to push the economy a little bit further and hope that we can perform better than we projected,” Gan said, adding that the country will also “prepare to give some room, should there be any disruptions to the economy.”
Singapore’s economy is heavily dependent on trade, with the country boasting a trade-to-GDP ratio of over 300%, one of the highest globally.
Gan’s comments come a day after Singapore Prime Minister Lawrence Wong announced the country’s budget for its 2025 fiscal year. It unveiled a slew of support measures for households and businesses to cope with cost-of-living pressures, as well as schemes to support the development of local companies.
One notable announcement made by Wong in the budget speech was that Singapore would study the potential deployment of nuclear power in the country, after having initially assessed in 2010 that conventional nuclear energy was unsuitable for the city-state.
Gan told CNBC that the main consideration for Singapore was the safety and maturity of nuclear technology, also noting that Singapore’s small land size prevents it from having a large safety buffer zone, such as those in traditional nuclear plants.
The island of 456.3 square miles relies on mainly liquified natural gas to fuel its energy needs. In 2023, around 95% of its energy generation came from LNG. Most of Singapore’s natural gas comes from Malaysia and Indonesia.
The remaining 5% of electricity supply is generated by a mix of of coal, oil, solar and waste.
Hence, Singapore is observing the development of small modular reactors, or SMRs, to assess if they are suitable for the country.
“It all depends on the development of technology, for example, how we can commercialize the SMRs to make sure that they’re viable and they are suitable for us?,” Gan said.
While he did not specify how long it would be before Singapore implements nuclear energy, if at all, Gan said, “It will take time for ourselves to be ready for the SMRs when the technology is available,” he said. “Even preparation of sites will take time.”
