Singapore has raised its GDP growth range estimates this year to 2 to 4%, from an earlier 1 to 3%, on an improved outlook where AI-led growth is seen to continue into 2026.
In the final quarter last year, Singapore's GDP was up 6.9% y-o-y, a pick up from 4.6% in the preceding 3Q, as stronger than expected AI-related electronics demand, an unexpectedly large pharmaceutical order, and the financial services sector did the heavy lifting.
This brings growth for the whole of 2025 to 5%, slightly lower than 5.3% managed in 2024 but higher than the earlier forecast of 4% given last November.
According to the Ministry of Trade and Industry on Feb 10, global economy has outperformed expectations, with most major economies turning in stronger-than-expected growth in the fourth quarter of 2025.
"Notably, global trade activity remained resilient despite the US tariffs, likely reflecting effective US tariff rates that were lower than the announced headline rates, trade diversion facilitated by supply chain adjustments, and robust AI-related exports amidst the AI investment boom," says MTI.
The ministry expects this growth momentum seen in 4Q 2025 to carry into this year.
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"Apart from the AI investment boom, which is expected to be sustained in 2026, expansionary fiscal policies in several economies such as the US, Germany and Japan, as well as accommodative global financial conditions, should also support global growth in the quarters ahead," explains MTI.
"Taking these factors into account, the GDP growth outlook for Singapore’s key trading partners for 2026 has improved compared to the outlook in November.
However, MTI cautions that the pace of growth for most of these economies is still expected to ease from 2025 levels, in part due to the drag from the full-year impact of the US tariffs and rising trade barriers that would weigh on non-AI-related global trade.
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Manufacturing boom
In 2025, the manufacturing sector, led by electronics, was the star. From growth of 5.3% y-o-y in 3Q, this sector expanded by 18.8% y-o-y in 4Q 2025 - a kind of level that marked the go-go years of the 1980s. For the whole year, it was up 8.7%, versus 3.8% seen in 2024.
There was some moderation in the construction sector though, with growth coming in at 4.6% y-o-y in 4Q, down from 5.6% in 3Q. Nonetheless, construction was up 5.2% for the whole of 2025, just slightly off 5.4% managed in 2024.
Most other economic sectors managed varying levels of growth. The food & beverage services sector, meanwhile, is one of the weaker industries with growth of just 0.2% y-o-y in 4Q, but still a turnaround from contraction of 1.9% in 3Q. The growth was led by higher sales volume of food caterers, which outweighed a decline in the sales volume of restaurants.
Still, for the full year of 2025, this sector was down 0.9%, extending the 1.1% contraction in 2024.
