SINGAPORE: Singapore on Friday (Nov 21) upgraded its economic growth forecast for 2025 to around 4 per cent after a better-than-expected performance in the third quarter of the year.
This is quicker than the previous growth projection of 1.5 per cent to 2.5 per cent that was made in August.
The Ministry of Trade and Industry (MTI) expects Singapore's gross domestic product (GDP) to grow at 1 per cent to 3 per cent in 2026.
MTI had upgraded the 2025 GDP growth forecast in August on account of strong front-loading activities in the second quarter.
This was due to the pause in the US’ reciprocal tariffs, as well as an improvement in the outlook for Singapore’s external demand due to the de-escalation in trade tensions between the US and several of its trading partners.
At that time, MTI had expected global growth to slow down in the second half of the year, with the dissipation of the boost from front-loading activities and the reinstatement of the US’ reciprocal tariffs after the temporary pause.
"Global economic conditions have turned out to be more resilient than expected," said MTI in a press release.
Singapore's economy grew 4.2 per cent year-on-year in the third quarter, faster than the advance estimate of 2.9 per cent. This also extended the 4.7 per cent growth in the second quarter.
MTI said the expansion in the third quarter was mainly driven by manufacturing, wholesale trade and finance and insurance sectors.
On a quarter-on-quarter, seasonally adjusted basis, the economy grew by 2.4 per cent in the July to September period, compared with 1.7 per cent in the April to June period.
Singapore's key trading partners performed better than expected in the third quarter, said MTI, noting that export growth for China and Vietnam remained robust amid ongoing trade diversion and supply chain adjustments.
The stronger-than-anticipated artificial intelligence (AI) boom supported US economic growth, which in turn supported exports of AI-related semiconductors from the region.
The ministry also pointed to a further de-escalation in trade tensions, with the US-China trade truce extended to November 2026 with a reduced US tariff rate on China.
"Meanwhile, the rollout of the sectoral tariffs on semiconductors and pharmaceuticals has been slower than earlier anticipated," said MTI.
GDP growth for most of Singapore's key trading partners is likely to be lower than that in 2025, as the impact of the US tariffs is expected to be more pronounced, said MTI.
"In particular, China’s GDP growth is forecast to moderate on the back of slower export growth and the boost provided by the consumer goods trade-in scheme fades," it added.
"GDP growth in the Eurozone is also projected to slow as industrial activity weakens due to the US’ tariffs."
This slowdown in growth in major economies would moderate the demand for exports from Southeast Asia.
GDP growth among key Southeast Asian economies is expected to ease, although stable domestic demand "should provide some support".
MTI expects the US economy to remain "relatively resilient", supported by sustained AI-related investment even as domestic consumption growth moderates amid cooling labour market conditions.
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This is quicker than the previous growth projection of 1.5 per cent to 2.5 per cent that was made in August.
The Ministry of Trade and Industry (MTI) expects Singapore's gross domestic product (GDP) to grow at 1 per cent to 3 per cent in 2026.
MTI had upgraded the 2025 GDP growth forecast in August on account of strong front-loading activities in the second quarter.
This was due to the pause in the US’ reciprocal tariffs, as well as an improvement in the outlook for Singapore’s external demand due to the de-escalation in trade tensions between the US and several of its trading partners.
At that time, MTI had expected global growth to slow down in the second half of the year, with the dissipation of the boost from front-loading activities and the reinstatement of the US’ reciprocal tariffs after the temporary pause.
"Global economic conditions have turned out to be more resilient than expected," said MTI in a press release.
THIRD QUARTER
Singapore's economy grew 4.2 per cent year-on-year in the third quarter, faster than the advance estimate of 2.9 per cent. This also extended the 4.7 per cent growth in the second quarter.
MTI said the expansion in the third quarter was mainly driven by manufacturing, wholesale trade and finance and insurance sectors.
On a quarter-on-quarter, seasonally adjusted basis, the economy grew by 2.4 per cent in the July to September period, compared with 1.7 per cent in the April to June period.
Singapore's key trading partners performed better than expected in the third quarter, said MTI, noting that export growth for China and Vietnam remained robust amid ongoing trade diversion and supply chain adjustments.
The stronger-than-anticipated artificial intelligence (AI) boom supported US economic growth, which in turn supported exports of AI-related semiconductors from the region.
The ministry also pointed to a further de-escalation in trade tensions, with the US-China trade truce extended to November 2026 with a reduced US tariff rate on China.
"Meanwhile, the rollout of the sectoral tariffs on semiconductors and pharmaceuticals has been slower than earlier anticipated," said MTI.
2026 OUTLOOK
GDP growth for most of Singapore's key trading partners is likely to be lower than that in 2025, as the impact of the US tariffs is expected to be more pronounced, said MTI.
"In particular, China’s GDP growth is forecast to moderate on the back of slower export growth and the boost provided by the consumer goods trade-in scheme fades," it added.
"GDP growth in the Eurozone is also projected to slow as industrial activity weakens due to the US’ tariffs."
This slowdown in growth in major economies would moderate the demand for exports from Southeast Asia.
GDP growth among key Southeast Asian economies is expected to ease, although stable domestic demand "should provide some support".
MTI expects the US economy to remain "relatively resilient", supported by sustained AI-related investment even as domestic consumption growth moderates amid cooling labour market conditions.
Continue reading...