The Ministry of Trade and Industry (MTI) has upgraded its GDP growth forecast for 2025 to “around” 4%, from 1.5% to 2.5% previously, after Singapore’s economy did better than expected in the 3Q2025.
During the quarter, Singapore’s GDP expanded by 4.2% y-o-y, up from the 2.9% advance estimate and extending the 4.7% growth in the previous quarter. On a q-o-q seasonally-adjusted basis, the economy grew by 2.4%, faster than the 1.7% expansion in the 2Q2025.
For the first three quarters of 2025, Singapore’s GDP growth averaged 4.3% y-o-y.
The upgrade also comes as the government factored in better-than-expected global economic conditions following MTI’s upgrade in August. GDP growth in most of Singapore’s key trading partners also came in better than expected in the 3Q2025.
In its Nov 21 statement, MTI noted the robust exports growth in China and Vietnam, as well as the stronger-than-expected artificial intelligence (AI) boom supporting US economic growth and the exports of AI-related semiconductors from the region.
The ministry was also upbeat over the further de-escalations in trade tensions in recent months; the US-China trade truce has been extended to November 2026 with a lowered US tariff rate on China while the rollout on tariffs on semiconductors and pharmaceuticals were slower than anticipated.
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In the 3Q2025, trade-related sectors such as the manufacturing, wholesale trade and transportation & storage sectors outperformed expectations, which spilled over to other sectors including outward-oriented services sectors such as information & communications and professional services. The latter also benefitted from resilient demand for services from regional economies.
2026 economy to come in at 1% to 3%
In 2026, the government is expecting Singapore’s GDP to come in at 1% to 3% as GDP growth for the country’s key trading partners are also likely to be lower y-o-y as the impact of the US’s tariffs are expected to be more pronounced.
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China’s GDP growth is expected to moderate from slower exports growth and the fading effects of the boost from the consumer goods trade-in scheme.
GDP in the Eurozone is also projected to slow as industrial activity declines from the US tariffs.
Meanwhile, the US economy is expected to remain relatively resilient from AI-related investments although domestic consumption growth is expected to moderate amid cooling labour market conditions.
Consequently, GDP growth among key Southeast Asian economies is expected to ease, with slowing major economies leading to moderated demand for exports from the region.
Among the sectors, Singapore’s manufacturing and trade-related services sectors are likely to see a slower expansion y-o-y, although the electronics cluster within the manufacturing sector is expected to be supported by demand for AI-related semiconductors, servers and server-related products.
However, given the uncertainty on US tariffs on semiconductors, semiconductor firms may take longer to commit to new capacity investments.
Output from the biomedical manufacturing cluster is also expected to ease y-o-y in 2026.
Within the services sectors, MTI expects the information & communications and finance & insurance sectors are expected to see “steady growth”, reflecting the resilient enterprise demand for digital solutions and services and supportive financial and macroeconomic conditions respectively.
Domestic-oriented sectors like construction is forecast to continue growing from expansions in public residential building and civil engineering, while retail trade and food & beverage services is likely to remain subdued.
