Singapore’s Q3 GDP beats expectations as growth slows into 2026
Singapore surprised analysts in the latest quarterly release, with the economy growing more than expected in the third quarter. The official data showed GDP rising 2.9% year-on-year for the quarter ended September, topping economists’ projected 1.9% growth and signaling resilience amid a backdrop of cooling momentum in several sectors. However, the result also underscored a clear turning point: growth is expected to moderate in 2026 as external conditions dim the pace of expansion.
What drove the surprise Q3 gains?
On a seasonally adjusted quarter-on-quarter basis, Singapore’s economy expanded by 1.3%, a slight dip from 1.5% in the previous quarter but still indicating ongoing momentum. The standout drag in the quarter came from the manufacturing sector, which flattened after a strong 5% expansion in Q2. Within manufacturing, declines in biomedical and general manufacturing clusters offset gains in other sub-sectors, according to the Ministry of Trade and Industry (MTI).
Construction, while still expanding, cooled to 3.1% year-on-year from 6.2% in the prior quarter. The mixed picture suggests a shift in the economy’s balance between manufacturing and the services space, with services sectors and non-tradable activities helping cushion overall growth even as core manufacturing rebalances.
What the government says about the balance of risks
The Monetary Authority of Singapore (MAS) kept its policy stance unchanged in tandem with the Q3 data. MAS warned that growth is likely to slow in 2026 as activity returns to a more normal pace in trade-related sectors. In its forward guidance, the central bank projected 2026 GDP growth to slow toward a near-trend pace, with the output gap narrowing to around zero. The message is clear: Singapore can expect steadier but slower expansion amid global headwinds and a normalization of external demand.
Where does Singapore see growth coming from?
MAS pointed to several pillars that could support a steadier, if slower, growth path next year. First, global investment in artificial intelligence is anticipated to bolster Singapore’s manufacturing ecosystem, potentially offsetting some declines in traditional manufacturing clusters. Second, construction and financial services are expected to benefit from ongoing infrastructure spending and accommodative financial conditions. These tailwinds could help Singapore maintain resilience even as the external environment cools.
Trade performance and export dynamics
Trade data remained a mixed bag in August, with non-oil domestic exports (NODX) falling 11.3% year-on-year—the sharpest decline since March 2024. While exports to Indonesia, the United States, and China slumped in August, shipments to the European Union, Taiwan, and South Korea showed resilience. The United States alone accounted for a sharp 28.8% year-on-year fall in August after an even larger drop in July. These patterns reflect the broader regional demand shifts and the sensitivity of Singapore’s export-intensive sectors to global cycles.
Looking ahead: policy, earnings, and investor confidence
With the MAS outlook pointing to a slower 2026, domestic policy will likely prioritize sustaining growth through productivity gains and targeted infrastructure spending. For investors and businesses, the message is one of cautious optimism: the economy may grow at a more sustainable pace, supported by secular trends such as digitalization and logistics resilience, rather than by the outsized swings of the past year. The near-zero output gap projected for 2026 suggests a stabilization phase where inflation remains managed and financial conditions stay accommodative.
Note: This is breaking news. Updates will follow as new data and MAS communications are released.
