Singapore Lifts 2025 Growth Forecast as Third-Quarter GDP Surpasses Expectations

Singapore raised its 2025 economic growth outlook on Friday after the economy expanded faster than expected in the third quarter. However, policymakers cautioned that momentum is likely to moderate in 2026 as U.S. tariffs begin to weigh on global demand.

The Ministry of Trade and Industry revised its 2025 GDP forecast to around 4%, up from the earlier projection of 1.5% to 2.5%. The upgrade was mainly driven by stronger-than-expected performance in the July-to-September period.

According to the ministry, global conditions have proven more resilient than anticipated, supported by firmer demand from major trading partners, a rise in semiconductor shipments linked to the artificial intelligence boom, and a period of easing in U.S.–China trade tensions.

The economy grew 4.2% year-on-year in the third quarter, following a 4.7% expansion in the second quarter. The result exceeded both the government’s advance estimate of 2.9% and the 4% growth forecast from private economists. This outperformance came despite persistent trade headwinds through the period.

For 2026, officials project GDP growth of 1% to 3%, reflecting a softer external environment.

On a quarter-on-quarter seasonally adjusted basis, GDP rose 2.4%, up from a revised 1.7% in the second quarter.

Manufacturing remained a key growth driver, supported by strong export demand. Electronics output rose 6.1%, boosted by shipments of AI-related chips, servers, and components. The ministry expects continued demand for AI-related products to support both manufacturing and wholesale trade through the rest of the year.

Across the first nine months of 2025, the economy expanded 4.3% compared with the same period a year earlier.

Despite the relatively strong performance expected for 2025, authorities warned that the outlook for 2026 is less certain. Many of Singapore’s major trading partners are expected to experience slower growth next year as the impact of U.S. tariffs becomes more pronounced.

Singapore’s exports to the United States currently face a baseline tariff of 10%, which remains lower than the duties imposed on several Southeast Asian economies.

However, sector-specific levies, including the suspended 100% tariff on branded pharmaceuticals, remain a concern.

Prime Minister Lawrence Wong noted last month that negotiations with Washington were still at an early stage and that businesses had limited clarity on how the United States intends to apply specific sectoral tariffs. Implementation of the pharmaceutical tariff has been paused to allow companies additional time to pursue exemptions.

Non-oil domestic exports fell 3.3% in the third quarter after rising 7% in the April to June period, with pharmaceuticals and petrochemicals weighing on overall performance. Shipments to the United States dropped 30.7% in the same quarter.

In October, NODX rebounded sharply, rising 22.2% year over year, helped by higher exports of non-monetary gold and electronic goods. Shipments to the U.S. fell 12.5% during the month.

Analysts expect the Monetary Authority of Singapore to maintain its policy stance at its next meeting in January, given steady growth conditions and contained price pressures. The central bank left its stance unchanged at its final review of the year in October, citing stable economic activity and subdued inflation.

Consumer price inflation rose 0.7% in September from a year earlier, within the central bank’s projected range of 0.5% to 1% for 2025.