The nation’s GDP growth forecast for 2025 has also been upgraded to “around 4.0%”, largely reflecting a better-than-expected economic performance in Q3 2025.
Singapore’s Ministry of Trade and Industry (MTI) has announced that for 2026, the nation’s GDP growth is projected to come in at “1.0-3.0%”.
Singapore’s economic outlook for 2026
In 2026, most key sectors are expected to expand, but at a slower but steady pace. Manufacturing and trade-related services are expected to moderate compared to 2025.
In manufacturing, the electronics cluster will be supported by demand for AI-related semiconductors, servers, and related products, with spillover benefits for the machinery, equipment & supplies segment in wholesale trade. Similarly, growth in transport engineering will be driven by higher-value maintenance, repair & overhaul activities in aerospace and strong order books in marine & offshore engineering.
However, the precision engineering cluster may face near-term challenges, as semiconductor firms may take longer to commit to new capacity investments due to uncertainty over US semiconductor tariffs. At the same time, output in the biomedical manufacturing cluster is expected to ease from the high levels recorded in 2025.
Among outward-oriented services sectors, both the information & communications and finance & insurance are expected to post steady growth, supported by resilient enterprise demand and for digital solutions and services, and supportive financial and macroeconomic conditions. Domestically, the construction sector is forecasted to continue growing, led by expansions in public housing and civil engineering works, while growth in consumer-facing sectors such as retail trade and food & beverage services is likely to remain subdued.
These domestic prospects are shaped by a weaker external environment. In 2026, GDP growth across many of Singapore’s key trading partners is expected to fall below 2025 levels as the effects of US tariffs become more pronounced. China’s growth is set to moderate due to slower export performance and the boost provided by the consumer goods trade-in scheme.
The Eurozone is also projected to slow as industrial activity weakens. The slowdown in growth in major economies will moderate the demand for exports from Southeast Asia. Consequently, GDP growth among key Southeast Asian economies is expected to ease, although stable domestic demand should provide some support.
Meanwhile, the US economy is expected to remain relatively resilient, supported by sustained AI-related investment even as consumer spending moderates amid cooling labour market conditions.
Risks to the global outlook persist. First, while global economic uncertainty has receded since the first half of 2025, it remains elevated. A renewed escalation in tariff actions or geopolitical tensions could lead to a resurgence in economic uncertainty, which would weigh on sentiments and cause businesses and households to pull back on hiring, investment and spending.
Second, an escalation in risk-off sentiments could trigger sharp corrections in global financial markets, with potential spillovers to broader economic growth.
Economic outlook for 2025
In August, MTI raised Singapore’s 2025 GDP growth forecast to 1.5–2.5%, reflecting strong front-loading activities in Q2 2025 following the temporary pause in US reciprocal tariffs, along with an improved outlook for external demand as trade tensions eased between the US and several of its trading partners. At the time, MTI had expected global growth to weaken in the second half of the year once the effects of front-loading faded and the US reinstated its reciprocal tariffs.
However, global conditions have proven more resilient than expected. GDP growth among most of Singapore’s key trading partners outperformed projections in Q3 2025. In the region, economies such as China and Vietnam continued to record strong export growth, supported by ongoing trade diversion and supply chain adjustments. The stronger-than-anticipated AI boom also lifted US economic growth and boosted demand for AI-related semiconductors from the region.
Further, trade tensions have eased in recent months as well; notably, the US-China trade truce has been extended to November 2026, accompanied by a reduced US tariff rate on China, while the rollout of sectoral tariffs on semiconductors and pharmaceuticals has been slower than initially expected.
With these positive developments, the full-year GDP outlook for Singapore’s key trading partners has improved. Against this backdrop, Singapore’s economy performed better than expected in Q3 2025. Trade-related sectors — including manufacturing, wholesale trade, and transportation & storage — recorded stronger-than-expected outcomes, supported by resilient global demand and robust orders for AI-related semiconductors, servers, and related products.
This momentum also generated spillovers to outward-oriented services sectors such as information & communications and professional services, the latter further beneffited from steady demand for services from regional markets.
For the remainder of the year, demand for AI-related electronics is expected to continue supporting the manufacturing and wholesale trade sectors. Growth in outward-oriented services — including information & communications, professional services, and finance & insurance — is also projected to remain resilient.
Taking into account the stronger-than-expected 4.2% year-on-year growth in the third quarter, along with the latest global and domestic developments, MTI has upgraded Singapore’s 2025 GDP growth forecast from 1.5-2.5% to around 4.0%.
For sectoral breakdown, please refer to MTI’s full report here.