Quarterly momentum lifts full-year result
The fourth-quarter outcome exceeded the revised 4.3% expansion posted from July to September. The stronger finish raised full-year growth to 4.8%, a figure that Prime Minister Lawrence Wong described in his New Year’s message as “a better outcome than we expected, given the circumstances.” Wong cautioned, however, that maintaining the current pace will be difficult.
The 4.8% annual increase surpassed MTI’s November projection of “around 4%.” It also came against a backdrop of slower global demand, persistent geopolitical uncertainty and higher financing costs worldwide.
Outlook tempered by external headwinds
Looking ahead, MTI projects gross domestic product growth of 1% to 3% for 2026. Selena Ling, Chief Economist and Head of Group Research & Strategy at OCBC Bank, said the latest numbers demonstrate Singapore’s resilience, supported by diversified strengths in manufacturing, services and construction. Ling anticipates overall growth of about 2% in 2026, assuming manufacturing moderates to roughly 2.2% year on year as base effects fade.
The government has repeatedly warned that 2025 could prove challenging. Concerns stem largely from escalating trade tensions after U.S. President Donald Trump’s administration imposed a 10% baseline tariff on dozens of countries in April during what the White House labeled “Liberation Day.” The duties applied even to Singapore, which has maintained a free-trade agreement with the United States since 2004. At the time, Wong said the measures were “not actions one does to a friend.”
Trade exposure heightens Singapore’s vulnerability to such shocks. The country’s trade-to-GDP ratio exceeded 320% in 2024, according to World Bank data, underscoring its deep integration into global supply chains.
Policy adjustments to cushion potential slowdown
In response to the external risks, Singapore eased monetary policy twice in 2025, signaling readiness to support activity should conditions weaken further. Authorities also warned last April that zero growth was a possibility if global demand deteriorated.
Even so, the latest industrial rebound has provided a temporary buffer. The biomedical manufacturing cluster benefited from sustained demand for pharmaceuticals and medical devices, while electronics output rose on improved semiconductor orders. Together, the two segments offset softness elsewhere in the economy.
Sectors in contraction
Construction activity retreated amid slower public-sector projects and more cautious private investment. Within services, wholesale and retail trade, transportation and storage, and real estate each recorded declines, reflecting subdued domestic sentiment and cautious corporate spending.
Financial services also softened as higher interest rates weighed on credit demand. Nonetheless, MTI noted that pockets of growth persisted in information and communications technology as well as professional services, aided by ongoing digitalization initiatives.
Key figures at a glance
- Fourth-quarter GDP growth: 5.7% year on year
- Manufacturing growth: 15% year on year
- Third-quarter GDP growth (revised): 4.3% year on year
- Full-year 2025 GDP growth: 4.8%
- Manufacturing share of GDP: ~20%
- Official 2026 GDP forecast: 1%–3%
- OCBC 2026 GDP projection: ~2%
- Trade-to-GDP ratio (2024): >320%
- U.S. tariff applied to Singapore: 10% baseline
High base effect expected to curb future gains
Economists caution that the sizable manufacturing expansion sets a high comparison point for upcoming quarters. As a result, growth rates are likely to moderate even if absolute output remains elevated. MTI said it will update the preliminary figures and provide a detailed sectoral breakdown next month.
Crédito da imagem: Calvin Chan Wai Meng | E+ | Getty Images
