SINGAPORE, Dec 31, 2025 (BSS/AFP) - Singapore's economy beat forecasts to grow 4.8 percent in 2025, the prime minister said Wednesday, but he warned that sustaining that rate of expansion would be "difficult" due to unpredictable global trade.

The figure surpassed forecasts for growth of 4.0 percent and showed that the trade-driven city-state has weathered the initial impact of tariffs imposed on dozens of countries by US President Donald Trump.

The wealthy Southeast Asian nation is heavily reliant on international trade and is vulnerable to any global slowdown induced by the tariffs.

In his New Year's message, Prime Minister Lawrence Wong said 2025 "marked a major turning point in global affairs" as "long standing assumptions about open markets and win-win cooperation were questioned and sometimes rejected."

The world has "become less predictable and secure," he said, adding however that "despite these external troubles, our economy performed better than expected".

He said the global economy turned out to be more resilient than anticipated and US tariffs were imposed at lower levels than feared.

"We also benefitted from an AI-related surge in demand for semiconductors and electronics. As a result, unemployment and inflation remained low, and real incomes have risen across the board," he added.

However, Wong, warned that sustaining that level of economic expansion into next year would be "difficult" and urged Singaporeans to be realistic.

"Fractured trade and geopolitical tensions are not transient problems, but permanent features of a more fragmented world," he said.

"We will face more obstacles to growth and inflationary pressures may intensify... as a small and open economy, Singapore cannot fully shield ourselves from these headwinds."

The trade ministry has said that the economy is expected to grow at a slower pace of "1.0-3.0 percent" in 2026 due to a weaker global economy as the effects of US tariffs become more pronounced.

Wong said Singapore "must rethink, reset and refresh" its economic strategies to remain competitive.

Singapore has long depended on the open global trading system to power its growth for decades, but Trump's tariff policies has upended that foundation.

A government task force is expected to soon release its recommendations on new economic paths.