Singapore upgrades 2025 GDP growth forecast to about 4% after third quarter beats estimate

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.