Economic growth accelerates in the fourth quarter of 2025

GDP growth revised upward: Singapore's GDP increased 6.9% on a year-on-year basis in Q4, up from 4.6% growth in the previous quarter and surpassing the advance estimate of 5.7%. Q4's reading was the strongest since Q3 2024. In seasonally adjusted quarter-on-quarter terms, the economy expanded 2.1% in Q4, following 2.6% growth in the prior quarter. Overall, Singapore’s GDP expanded 5.0% year on year in 2025, slightly below 2024’s upwardly revised 5.3% but still above the average growth of the past decade.

Manufacturing growth hits eight-year high: Relative to the previous quarter's data, readings in Q4 improved for private spending (+4.5% in annual terms vs +3.4% in Q3), fixed investment (+7.4% vs +4.1% in Q3) and goods and services exports (+12.0% vs +11.5% in Q3). In contrast, readings worsened for government spending (+5.1% vs +5.4% in Q3) and imports of goods and services (+12.8% vs +13.8% in Q3). Manufacturing contributed significantly to Q4 GDP growth, expanding 18.8% in annual terms, sharply up from 5.3% in the previous quarter and well above expectations, marking the highest growth since Q3 2017. The surge was driven largely by the electronics cluster, as AI-related demand for semiconductors, servers and related products exceeded expectations, while biomedical manufacturing also saw robust growth due to higher production of a key pharmaceutical ingredient and the frontloading of sales ahead of potential U.S. pharma tariffs. For 2025 as a whole, economic growth was largely supported by the manufacturing—fueled by robust demand for AI-related electronics—and wholesale trade sectors as well as the finance and insurance sectors.

Economic growth to moderate in 2026: Annual GDP growth is likely to remain above the full-year figure for 2025 in Q1 2026, supported by persistent AI demand, but is expected to gradually ease during the year due to the delayed impact of U.S. tariffs, which will weigh on the external sector. In 2026 as a whole, our panelists expect GDP growth to almost halve from 2025, reaching a three-year low, as private spending, fixed investment and exports should all lose steam. Our Consensus sits at the lower end of Singapore’s Ministry of Trade and Industry’s revised forecast range of 2.0–4.0% (previously 1.0–3.0%). The pace and durability of the AI investment cycle remain key factors to monitor.

Panelist insight: United Overseas Bank’s Jester Koh commented on the outlook: “We are raising our 2026 GDP growth forecast for Singapore […] with risks likely still tilted towards the upside after the sharp revision. Our prior projections had assumed a technical q/q sa contraction in 1Q26 following three consecutive quarters of robust sequential expansion—an outcome that now appears unlikely given further indications of sustained AI-related momentum.”

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