Singapore Economy: A stunning year in 2025
Singapore Economy: A stunning year in 2025
Will the Singapore economy be third time lucky in 2026 in terms of exceeding the 1-3% YoY official GDP growth forecast? Our 2026 GDP growth forecast remains at 2% YoY.
Selena Ling
Chief Economist & Head,
OCBC Group Research,
OCBC
Singapore’s advance 4Q25 growth accelerated to 5.7% YoY (1.9% QoQ sa; seasonally adjusted), up from 4.3% YoY (2.4% QoQ sa) as the manufacturing sector surged 15% YoY on the back of outperformance in pharmaceutical and electronics.
Notwithstanding an eventful year of US tariffs and geopolitical uncertainties, this positive outcome was faster than the 5% YoY growth seen in 4Q24.
Strong manufacturing growth
Notably, the manufacturing growth of 15% YoY was the fastest since 4Q21 (16% YoY), whereas the construction and services sectors saw some moderation in growth to 4.2% YoY and 3.8% YoY respectively, versus the 5.1% YoY and 4.1% YoY seen in 3Q25.
The manufacturing sector was mainly powered by a pharmaceutical and sustained AI-related semiconductor, server and server-related demand. For services, the wholesale & retail trade and transportation & storage industries picked up speed in 4Q25 at 3.9% YoY (3Q: 3.7%), but the momentum in infocomms, finance & insurance and professional services (4.2% versus 4.5% YoY) and accommodation & food services, real estate, administrative & support services and other services (3.2% versus 4.0%) moderated.
The wholesale trade sector saw strong sales of telecoms & computer equipment and electronic components, while the transportation & storage sector registered resilient support from the water and air transport segments. The infocomms sector was aided by IT and information services demand, while professional services continued to see support from head offices & business representative offices segment. Banking and insurance also boosted the finance & insurance sector, and robust international visitor arrivals also led growth in the accommodation sector. The construction sector was aided by ongoing public and private sector construction activities.
2025 growth was the fastest pace since 2021
Singapore’s full-year 2025 GDP growth of 4.8% YoY, beat 2024’s 4.4% YoY and marked the fastest pace of growth since 2021 (9.8% YoY) and well above medium-term trend growth. This impressive outcome marked a significant upward revision from earlier forecasts that had projected slower growth and reflected a resilient global economy and export demand, some front-loading ahead of reciprocal tariff pressures and also broad-based gains across key sectors. MTI had recently upgraded its full-year 2025 GDP growth forecast to around 4% in November. In particular, the manufacturing sector led the vanguard at 7.6% YoY (fastest since 2021’s growth rate of 13.3%), followed by construction at 4.1% YoY (easing from 2024’s 4.5%) and services at 4.1% (also easing from 2024’s 4.4%). Singapore’s 4Q25 and full-year 2025 GDP performance showcased economic resilience through broad-based and diversified strengths in manufacturing, services, and construction.
Another good year in 2026?
Will Singapore be third time lucky in 2026 in terms of exceeding the 1-3% YoY official GDP growth forecast? Our 2026 GDP growth forecast remains at 2% YoY, assuming that manufacturing growth will ease to around 2.2% YoY due to the high base in 2025, while construction remains resilient around 4.8% amid ongoing public infrastructure projects (e.g. Changi T5, Tuas port and North-South corridor) and services growth moderates to around 3.0% as wholesale trade activity normalises.
At this juncture, the global economy is tipped to continue to grow at 3.1% in 2026 versus 3.2% in 2025 and 3.3% in 2024, according to the IMF.
Our 2026 forecast for key regional economies like China is 4.7% YoY (versus close to the 5% target in 2025) with similar mild moderations in the ASEAN economies, barring unexpected surprises on the global trade, tariff and geopolitical fronts.
While US sectoral tariffs are still pending, with semiconductors and pharmaceuticals of critical interest to many Asian economies including Singapore, the hope is that just like how reciprocal tariffs have materialised and been lowered with bilateral trade deals, eventually the bark may be worse than the bite.
Meanwhile, visitor arrivals, especially for MICE activities should remain conducive and private consumption is likely to be supported by the resilient domestic labour market.
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