• Budget may swing back to deficit after a year of surplus

• Focus will be on living costs, productivity as trade war looms

Singapore is likely to boost spending in Lawrence Wong’s first budget as prime minister, offering more handouts to households and businesses ahead of election at a time of heightened global uncertainty and elevated costs at home.

Wong, who is also finance minister, is expected to focus on bringing down living costs and boosting social aid when he delivers a budget speech later on Tuesday. He will also likely detail measures to make workers and companies more competitive, as businesses bring onboard more artificial intelligence.

Higher revenues, thanks to a hike in the goods and services tax and robust economic growth in 2024, probably led to a larger-than-expected budget surplus in the fiscal year ending March, according to HSBC Holdings Plc economists Yun Liu and Madhurima Nag. That gives Wong’s administration “ample fiscal room” to provide support, they said.

Singapore is expected to register a deficit of 0.3% of gross domestic product in the fiscal year ending March 2026 compared with a 0.7% of GDP surplus estimated in the current year, according to analysts surveyed by Bloomberg News. The anticipated surplus exceeds the 0.1% of GDP that the government estimated a year ago.

Singapore is required by law to balance its budget within a government term, and according to economists including HSBC, Malayan Banking Bhd and Bank of America Corp., the administration is well within bounds.

The city-state last held a general election in July 2020 and it must conduct its next vote by November. Wong took over as Singapore’s fourth prime minister in May 2024.

The expansionary budget should help shore up Singapore’s trade-dependent economy as it braces for the impact of President Donald Trump’s tariffs. The city-state expects growth to come in at 1%-3% this year, down from 4.4% in 2024.

“A generous election budget, easing monetary conditions and the construction of mega infrastructure and private projects will cushion the uncertainty and drag from Trump’s brewing trade war,” said Maybank economists Brian Lee and Chua Hak Bin.

Here’s what may be in Wong’s budget speech from about 3:30 p.m. local time:

Price Pain

Elevated costs from food to housing remain a major concern for voters, despite Singapore’s cooling inflation. Persistent geopolitical risks could add to price pressures.

“We expect measures aimed at alleviating cost-of-living pressures to form the centerpiece of Budget 2025,” Bank of America economist Kai Wei Ang said.

The government will likely give more cash handouts, grocery and dining vouchers, as well as discounts for utilities to spur consumption and ease financial burdens, according to analysts. Personal income tax rebates could also be granted to middle-class Singaporeans.

With an aging population and a declining birth rate, authorities may top up existing measures for child education and health care, while offering new measures for specific groups like larger families and “sandwiched” households with both young children and elderly to care for.

“We expect to see some near-term relief measures, but these will remain targeted in nature. The message is consistent, as the government strives to provide the support where it is most needed, without stoking additional inflation pressures,” said HSBC’s economists.

Business Support

Companies are looking for assistance in the face of what they see as still-high operating costs. One in two businesses want the 2025 budget to help them cope with inflation — their main macroeconomic concern, according to the results of a survey released Friday by United Overseas Bank Ltd.

In UOB’s poll of 900 companies, 37% said the macro environment has led to an increase in their operating expenses, while 29% said they needed to cut costs.

The government could provide corporate income and property tax rebates, enhance firms’ access to affordable financing, or help fund wage increases. It could also ease rules around the hiring of foreign workers, particularly for the retail sector, which has found it difficult to attract local labor.

Global Resilience

Singapore may look to invest in programs that boost global competitiveness, especially as it faces tariff uncertainty, climate change and evolving business conditions due to the increased use of AI.

The budget could beef up the government’s SkillsFuture initiatives that help fund training. It could also offer companies grants to invest in decarbonization and digital tools, Maybank analysts said.

The government may take a pause in implementing more property cooling measures or wealth taxes in the 2025 budget, and instead wait for previous adjustments to take effect.

“Tough measures could also hurt sentiment amid an uncertain global economic climate,” Maybank analysts said.