Singapore upgrades 2026 GDP growth forecast to 2%-4%; economy expanded by 5% in 2025
The economy is now expected to grow by between 2 per cent to 4 per cent this year, up from the previous forecast of 1 per cent to 3 per cent.
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SINGAPORE: Singapore upgraded its economic growth forecast for 2026 on Tuesday (Feb 10) as it announced that gross domestic product grew 5 per cent last year.
The economy is now expected to grow by 2 per cent to 4 per cent this year, up from the previous forecast of 1 per cent to 3 per cent.
The full-year GDP growth figure for 2025 beat the Ministry of Trade and Industry's (MTI) advance estimate of 4.8 per cent, which was released last month, but was slightly lower than 2024's 5.3 per cent growth.
MTI also said the Singapore economy grew 6.9 per cent year-on-year in the fourth quarter of 2025, faster than the 4.6 per cent expansion recorded in the third quarter.
On a quarter-on-quarter seasonally adjusted basis, the economy grew by 2.1 per cent, a moderation from the 2.6 per cent growth in the previous quarter.
The ministry said its previous GDP growth projection in November 2025 was based on the expectation that economic activity would ease in major economies this year as US tariffs worked their way through the global economy.
However, most major economies turned in stronger-than-expected growth in the fourth quarter of 2025.
"Notably, global trade activity remained resilient despite the US tariffs, likely reflecting effective US tariff rates that were lower than the announced headline rates, trade diversion facilitated by supply chain adjustments, and robust (artificial intelligence-related) exports amidst the AI investment boom," said MTI.
GDP growth for 2025 was mainly driven by the manufacturing, wholesale trade and finance and insurance sectors. In particular, the electronics cluster of the manufacturing sector and the machinery, equipment and supplies segment of the wholesale trade sector grew robustly on account of strong AI-related electronics demand, the ministry said in its news release.
The finance and insurance sector saw broad-based growth across all segments, but the food and beverage services sector contracted, partly due to a decline in the sales volume of restaurants as dining preferences shift.
GROWTH OUTLOOK FOR 2026
The momentum seen in the last quarter is expected to be carried into 2026, the ministry said. Besides the AI investment boom, economies such as the US, Germany and Japan are expected to see expansionary fiscal policies. Accommodative global financial conditions should also support global growth in the quarters ahead.
"Taking these factors into account, the GDP growth outlook for Singapore’s key trading partners for 2026 has improved compared to the outlook in November," said MTI.
For example, the electronics cluster in the manufacturing sector is projected to grow at a stronger pace than previously expected, supported by robust demand for semiconductor chips in the data centre end-market, and the information and communications sector will be supported by sustained enterprise demand for AI-enabled and other digital solutions.
The ministry said the pace of growth is still expected to ease from 2025 levels in part due to the drag from the full-year impact of US tariffs and rising trade barriers.
Outlining some upside and downside risks, MTI said a stronger-than-projected upswing in the AI investment cycle could provide a greater boost to electronics demand and drive further gains in equity markets, while a renewed escalation in tariff actions or flare-ups in geopolitical tensions could weigh on the sentiments of businesses and households.
Looking to Singapore's trading partners, GDP growth in the US is projected to be broadly stable, supported by AI-related investments and the fiscal boost from the One Big Beautiful Bill Act.
In the Eurozone, growth is expected to weaken partly due to the US tariffs and elevated uncertainty, though accelerated fiscal spending in Germany and the India-EU trade deal could bolster growth.
China's GDP growth is expected to moderate as economic growth of its key trading partners softens, dampening exports growth. Southeast Asian economies should see growth supported by consumption and investment growth, though at a slower pace than in 2025.
NON-OIL DOMESTIC EXPORTS
In a separate release, Enterprise Singapore said on Tuesday that non-oil domestic exports (NODX) increased by 4.8 per cent in 2025, up from 0.2 per cent in 2024.
Growth drivers include PCs, semiconductors and disk media products for electronics, and structures of ships and boats, non-monetary gold and pharmaceuticals for non-electronics.
Electronic NODX expanded by 12.7 per cent year-on-year, and this momentum is expected to carry into 2026, said Enterprise Singapore.
The agency also upgraded the NODX growth forecast for this year to 2 per cent to 4 per cent.
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