Economic growth significantly revised up in Q3

GDP growth remains robust: Singapore's GDP expanded 4.2% on a year-on-year basis in Q3, following a 4.7% expansion in the previous quarter and far exceeding advance estimates of 2.9% growth. Although decelerating, Q3’s reading remained in line with the 2010–2024 average. In seasonally adjusted quarter-on-quarter terms, economic output expanded 2.4% in Q3, following a 1.7% expansion in the previous quarter.

Domestic demand keeps momentum strong: Compared to the prior period's data, figures in Q3 softened for private spending (+3.6% on a year-on-year basis vs +3.7% in Q2), government spending (+3.0% vs +5.7% in Q2) and goods and services exports (+8.4% vs +10.0% in Q2). In contrast, readings strengthened for fixed investment (+5.5% vs +4.3% in Q2) and imports of goods and services (+9.8% vs +9.6% in Q2). Fixed investment growth was supported by the ongoing tech upcycle, which is likely driving stronger equipment investment. In contrast, the slowdown in exports, combined with an acceleration in imports, caused net exports to contribute less than in the previous quarter—signaling mounting headwinds stemming from disruptions to international trade.

Economic momentum to fade ahead: Our panelists expect annual GDP growth to be easing in Q4 from Q3 as a result of higher international trade frictions. That said, the ongoing tech upcycle may be providing support. In 2026, GDP growth is expected to fall to a three-year low. Export growth should decline by two-thirds, hindered by global trade disruptions. That said, public spending growth is projected to accelerate.

Panelist insight: Commenting on the outlook, Chua Han Teng, analyst at DBS Bank: “The performance of the export-oriented manufacturing sector is also set to moderate in 2026, having expanded robustly by 5.0% yoy in the first three quarters of 2025. Electronics expansion has been resilient, supported by US tariff exemptions on electronic imports, and solid artificial intelligence (AI)-related demand. However, the electronics upcycle, ongoing since mid-2024, looks mature and would normalise if the support from the AI boom somewhat wanes, [or if] threatened US semiconductor tariffs are enforced, with the downside impact ultimately dependent on eventual conditions.”

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