SINGAPORE, May 22, 2025 (AFP) - Singapore's economy rose faster than expected in the first quarter year-on-year, official data showed Thursday, pushed by stronger global demand as businesses rushed to beat the imposition of higher US tariffs.

The government, however, warned that downside risks remained as a full-blown trade war between the United States and China could still reignite after the end of a 90-day pause.

Singapore's trade-oriented economy expanded by 3.9 percent in the three months to March from the same period a year before, surpassing an advance government estimate of 3.8 percent.

It was, however, weaker than the five percent expansion in the December quarter.

And on a quarter-on-quarter basis, the economy contracted by 0.6 percent, signalling the risks ahead.

The year-on-year growth in the first quarter was driven by the manufacturing and wholesale trade sectors due to "front-loading activities ahead of anticipated US tariff hikes", the trade ministry said.

Although US President Donald Trump imposed a baseline 10 percent tariff on Singapore, the city-state is vulnerable to a global economic slowdown caused by the much higher levies on dozens of other countries because of its heavy reliance on international trade.

In April, Trump suspended the imposition of the higher tariffs for 90 days, except for China but recent talks between Washington and Beijing have sparked hopes the world's two biggest economies will come to an agreement.

"Notwithstanding the positive developments in recent weeks, the global economic outlook remains clouded by significant uncertainty, with the risks tilted to the downside," the trade ministry said.

Uncertainty will likely lead to weaker spending as businesses and households adopt a "wait-and-see" approach, it said.

The ministry maintained its forecast for the economy to grow at between zero to two percent this year. This was a downgrade from its previous growth forecast of between one and three percent.