Economic growth rises in the fourth quarter of 2025

GDP growth hits 14-year high in 2025 as a whole: According to an advance estimate, Singapore's GDP expanded 5.7% in annual terms in Q4, following 4.3% growth in the prior quarter. Q4's reading was the joint-strongest since Q4 2021. As a result, Singapore’s economy expanded by a whopping 4.8% year on year in 2025 (2024: +4.4% yoy), posting the strongest result since 2011, excluding the Covid-period distortion. In seasonally adjusted quarter-on-quarter terms, economic output increased 1.9% in Q4, following 2.4% growth in the prior quarter.

Industrial activity expands at fastest pace in four years: Compared to the prior quarter's data, the reading for industrial activity improved in Q4 (+12.3% yoy vs +4.7% in Q3). In contrast, readings worsened for services activity (+3.8% vs +4.1% in Q3) and construction activity (+4.2% vs +4.9% in Q3). Industrial output rose at the fastest pace in four years, playing a central role in the robust expansion seen in the fourth quarter of 2025. This upswing was largely driven by the electronics sector, which benefited from surging global demand for AI-related semiconductors, servers and server-related products. Pharmaceutical production was also robust, likely due to front-loading of sales ahead of potential U.S. pharma tariffs.

Economic growth to ease in H2 2026: Economic growth will likely remain robust in the first half of 2026, bolstered by persistent AI-related product demand. That said, momentum should gradually ease through the end of 2026, on the back of the delayed impact of U.S. tariffs on global trade, and fading front-loading shipments which will drag on the external sector. A definitive breakdown will be released no later than 25 February 2026.

Panelist insight: Commenting on the outlook, Nomura’s Euben Paracuelles and Yiru Chen stated: “We expect growth to hold up in coming quarters, underpinned by strong construction activity and our view of a still-robust global tech cycle, which should, in turn, boost manufacturing output. In addition, trade-related services sectors will likely remain supported by export re-routing, given the realised US tariff rate of around 3% is among the lowest across US trade partners.”

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