Singapore Q3 GDP Beats Expectations as Growth Slows to a More Moderate Pace
Singapore’s economy defied expectations in the third quarter, expanding 2.9% year-on-year, according to the Ministry of Trade and Industry (MTI). The result topped economists’ forecasts of about 1.9% growth and followed a revised 4.5% expansion in the April-June period. On a seasonally adjusted quarter-on-quarter basis, activity rose by 1.3%, a slight deceleration from 1.5% in the second quarter. The data suggest that while the city-state’s economy remains resilient, momentum is cooling as it moves toward 2026.
Key Drivers and Detractors in the Quarter
Manufacturing acted as the main drag, reversing some of its earlier strength with flat to negative momentum in several clusters. Notably, output declined in the biomedical manufacturing and broader general manufacturing segments, offsetting gains in other manufacturing areas. The construction sector also cooled, growing 3.1% year-on-year compared with 6.2% the prior quarter. MTI highlighted that the performance reflects a broader normalisation after a rebound-driven second quarter.
These sectoral shifts underline the economy’s mixed composition. On one hand, Singapore benefits from a diversified base, including services, trade-related activities, and selected high-tech manufacturing. On the other hand, the softer manufacturing backdrop and softer construction activity underscore ongoing adjustments as global demand fluctuates and supply chains recalibrate.
MAS Outlook: Growth That Slows in 2026
In tandem with the GDP release, the Monetary Authority of Singapore (MAS) kept policy settings unchanged, signaling a cautious stance as it factors in a slower growth path ahead. MAS described 2026 as a year of moderated expansion, with the output gap projected to narrow toward zero. The central bank expects growth to track near-trend levels, reflecting a return to more sustainable pace after a robust 2023-2024 surge.
MAS cited external developments—potential cooling in global demand, shifts in trade patterns, and the adjustment of investment cycles—as the main forces shaping the slower trajectory. Yet the central bank also pointed to upside catalysts, including rising global investment in artificial intelligence and ongoing infrastructure spending. These factors could, in time, lift productivity and support services and high-tech manufacturing in Singapore.
What This Means for Exports and Investment
Singapore’s export picture has been mixed. August data showed a notable 11.3% year-on-year decline in non-oil domestic exports, the sharpest drop since March 2024. Some destinations saw declines (notably the United States and several key markets in Asia), while shipments to the European Union and other Asian economies remained resilient. The export mix highlights Singapore’s exposure to global demand cycles and the importance of adapting to shifting trade flows.
Nonetheless, the MAS and government officials remain optimistic that strategic investments, particularly in AI-driven manufacturing and advanced services, will cushion some of the near-term softness. The central bank emphasized that AI investment could bolster productivity and competitiveness, helping Singapore navigate a slower external environment while maintaining a high-value growth path.
What to Watch Next
Analysts will be scrutinising the upcoming quarterly data for signs of a continued deceleration or a stabilization as external conditions evolve. The government’s fiscal and monetary policies, infrastructure plans, and regulatory environment will likely shape the trajectory through 2026. Market participants also keep a close eye on how AI-related investments translate into measurable gains in output and the extent to which construction activity recovers as public and private projects resume scale.
This is breaking news; readers should check back for updates as new data and MAS communications are released.
