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- The upgrade follows a robust 2025, where the economy grew by 5.0%, significantly outperforming earlier estimates due to a strong surge in the final quarter.
- A sustained global surge in AI investments is the central driver for the upgrade, powering high demand in the electronics cluster (specifically semiconductors) and wholesale trade.
- Despite initial concerns over US tariffs and global trade barriers, Singapore’s trade activity remained resilient.
Singapore’s GDP growth forecast for 2026 has been upgraded from "1% – 3%" to "2% – 4%", said the Ministry of Trade and Investment (MTI), reflecting stronger-than-expected global and domestic momentum. The revision follows robust economic performance in 2025, when the economy grew 5.0%, with Q4 2025 expanding 6.9% year-on-year, faster than the 4.6% recorded in the previous quarter.
On a quarter-on-quarter seasonally adjusted basis, growth came in at 2.1%.
The annual growth was supported by strong performance in manufacturing, wholesale trade, and finance & insurance. In particular, the electronics cluster of the manufacturing sector and the machinery, equipment & supplies segment of the wholesale trade sector grew robustly on account of strong AI-related electronics demand. Meanwhile, the finance & insurance sector saw broad-based growth across all segments amidst largely accommodative financial. The food & beverage services sector, however, contracted amid shifts in dining preferences.
Sectoral performance in Q4 2025 and full year 2025
Manufacturing
The manufacturing sector expanded by 18.8% year-on-year in Q4 2025, accelerating from 5.3% in the previous quarter. Growth was driven by all clusters except general manufacturing, with electronics output surging 25.1% on stronger-than-expected AI-related demand for semiconductors and servers, and biomedical manufacturing rising 45.9% on higher production of a key high-value pharmaceutical ingredient.
On a quarter-on-quarter seasonally adjusted basis, the sector grew 8.4%, slightly below the 9.3% in Q3. For 2025 as a whole, the sector grew 8.7%, up from 3.8% in 2024.
Construction
The construction sector grew 4.6% year-on-year in Q4, down from 5.6% in Q3, supported by both public and private sector projects.
Quarter-on-quarter seasonally adjusted growth eased to 0.2%, from 0.6% previously. For the full year, the sector expanded 5.2%, slightly below the 5.4% growth in 2024.
Wholesale trade
The wholesale trade sector rose 9.9% year-on-year in Q4, up from 5.4% in Q3, led by the machinery, equipment & supplies segment. The fuels & chemicals segment shrank, weighed down by petroleum products, while the “others” segment also declined due to weak metals, timber and construction materials sales.
On a quarter-on-quarter seasonally adjusted basis, growth was 3.5%, up from 2.0% in Q3. For 2025 overall, the sector grew 6.1%, improving from 5.6% in 2024.
Retail trade
The retail trade sector expanded 2.3% year-on-year in Q4, continuing the 2.4% growth in Q3, supported by higher sales in both motor and non-motor vehicles. On a quarter-on-quarter seasonally adjusted basis, the sector shrank 0.3%, reversing the 1.3% growth in Q3. For 2025, the sector grew 1.3%, turning around from a 0.2% contraction in 2024.
Transportation & storage
Growth in the transportation & storage sector eased to 2.1% year-on-year in Q4, down from 2.7% in Q3. Water transport expanded on higher container throughput and sea cargo, while air transport grew with increases in cargo volume and passenger numbers at Changi Airport.
Quarter-on-quarter seasonally adjusted growth contracted 0.6%, a reversal from 0.2% in Q3. Full-year growth came in at 3.3%, moderating from 6.6% in 2024.
Accommodation
The accommodation sector grew 6.6% year-on-year in Q4, up from 4.6% in Q3, supported by higher hotel gross lettings, particularly in the luxury and mid-tier segments.
On a quarter-on-quarter seasonally-adjusted basis, growth slowed to 1.1% from 3.2% in Q3. For 2025 as a whole, the sector grew 3.1%, below the 5.0% expansion in 2024.
Food & beverage services
The food & beverage sector expanded marginally by 0.2% year-on-year in Q4, reversing a 1.9% contraction in Q3, driven by stronger sales in food catering despite weaker restaurant sales.
Quarter-on-quarter seasonally adjusted growth was 1.3%, up from a 0.7% contraction in Q3. Full-year 2025 saw a contraction of 0.9%, extending the 1.1% decline in 2024.
Information & communications
The information & communications sector grew 5.2% year-on-year in Q4, slightly below the 6.2% in Q3. IT & information services expanded on strong demand for data hosting and search engine activities, while games publishing supported the “others” segment.
Quarter-on-quarter seasonally adjusted growth slowed to 0.7% from 5.3% in Q3. For 2025, the sector expanded 6.1%, moderating from 14.2% in 2024.
Finance & insurance
The finance & insurance sector grew 3.7% year-on-year in Q4, down from 4.7% in Q3. Banking and insurance drove growth, while fund management was subdued due to weaker global equity markets.
On a quarter-on-quarter seasonally adjusted basis, growth rose 5.4%, reversing a 0.9% contraction in Q3. For 2025, the sector expanded 4.3%, below the 7.3% growth in 2024.
Real estate
The real estate sector grew 3.6% year-on-year in Q4, slightly below the 4.0% in Q3, supported by private residential, commercial, and industrial property activity.
Quarter-on-quarter seasonally adjusted growth was 0.6%, marginally higher than 0.5% in Q3. Full-year growth came in at 5.0%, extending 4.9% in 2024.
Professional services
The professional services sector grew 1.9% year-on-year in Q4, down from 2.5% in Q3, led by head offices, business representative offices, and accounting services.
Quarter-on-quarter seasonally adjusted growth contracted 0.8%, reversing 0.6% growth in Q3. For the year, the sector grew 2.0%, easing from 3.0% in 2024.
Administrative & support services
The administrative & support sector grew 0.9% year-on-year in Q4, down from 1.2% in Q3, supported by rental & leasing and security & cleaning services but weighed down by employment support and other business services.
On a quarter-on-quarter seasonally adjusted basis, the sector contracted 0.5%, extending a 0.7% decline in Q3. Full-year growth was 1.4%, easing from 1.9% in 2024.
Other services industries
The “other services industries” grew 3.3% year-on-year in Q4, slower than 4.7% in Q3, led by health & social services and arts, entertainment & recreation.
Quarter-on-quarter seasonally adjusted growth moderated to 0.1% from 0.8% in Q3. For 2025, the sector grew 3.3%, similar to 3.2% in 2024.
Looking ahead: Economic outlook around the world for 2026
Singapore
In November 2025, MTI announced that Singapore’s GDP growth for 2026 was projected to come in at “1.0% - 3.0%”. based on expectations of slower global growth due to US tariffs. Since then, most major economies outperformed in Q4 2025, with global trade remaining resilient thanks to lower effective US tariff rates, supply chain adjustments, and robust AI-related exports. Strong growth momentum from late 2025 is expected to continue into 2026.
Sustained AI investment, expansionary fiscal policies in the US, Germany, and Japan, and accommodative financial conditions should further support global growth. As a result, the GDP outlook for Singapore’s key trading partners has improved, though most economies are still expected to grow more slowly than in 2025 due to tariffs and rising trade barriers.
Southeast Asia
Key Southeast Asian economies are expected to benefit from consumption and investment growth amid accommodative fiscal and monetary policies. Growth is likely to ease compared with 2025, as softer commodity prices, US tariffs, and slower global trade weigh on exports.
Global uncertainties
Upside risks include a stronger AI investment cycle boosting electronics demand and equity markets, which could support global trade and consumption. Downside risks involve renewed tariff tensions, geopolitical flare-ups, or a sudden pullback in AI capital spending, which could dampen investment, household spending, and financial markets.
China
China’s GDP growth is expected to moderate due to slower export growth as trade barriers rise and growth in key trading partners softens.
US
US growth is projected to remain broadly stable, supported by AI-related investment and fiscal stimulus from the One Big Beautiful Bill Act. Consumption should stay resilient, though tariffs could exert some drag.
Eurozone
By contrast, GDP growth in the Eurozone is expected to ease due to weak exports and subdued industrial activity, partly from US tariffs and geopolitical uncertainty. Accelerated fiscal spending in Germany and the recent India-EU trade deal may provide some support.
Infographics / MTI
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