Singapore raised its growth forecast for this year to a range of 2% to 4% after a stronger-than-expected finish to 2025, saying on Tuesday that the global economic outlook was supportive and the AI investment boom would boost exports.
The city-state's economy grew 6.9% in the fourth quarter of 2025 from a year earlier, higher than an official advance estimate of 5.7%, government data showed.
On a quarter-on-quarter, seasonally adjusted basis, gross domestic product expanded 2.1% in the October-December period, also higher than an advance estimate of 1.9%.
The trade ministry upgraded its 2026 growth forecast from 1% to 3% previously, saying the global economy had outperformed expectations in late 2025 and that momentum would carry into this year.
"Against this backdrop, the 2026 growth outlook for the manufacturing and trade-related services sectors in Singapore has improved since November," the ministry said.
Trade ministry chief economist Yong Yik Wei told reporters the ministry has factored "sustained momentum in the AI investment boom" into its growth forecast.
Monetary Authority of Singapore chief economist Edward Robinson said the central bank remained comfortable with its assessment that inflation was heading towards its 1% to 2% forecast range, and would keep close tabs on global inflation trends in its policy reviews.
"MAS is now in an appropriate position to respond effectively to any risk to medium-term price stability," he said.
Barclays economist Brian Tan raised his 2026 GDP growth forecast to 3.5%, from 2.5%, although he also pencilled in a mild quarter-on-quarter contraction of 0.5% in Q1 2026.
Tan noted that biomedicals output spiked to a peak in October, and was 201% above the average monthly production level over June to August before crashing in December.
"While a resurgence cannot be ruled out – such is the volatility in this cluster – the flash evaporation of that biomedicals windfall already suggests Q1 GDP is set for a sequential contraction," he said.
Singapore's full-year growth for 2025 came in at 5.0%, compared to a preliminary reading of 4.8% and revised growth of 5.3% in 2024.
In a separate statement, Enterprise Singapore upgraded its forecast for growth in non-oil domestic exports to 2% to 4%, from 0 to 2% previously.
"Robust AI-related demand and high gold prices should continue to provide support to NODX growth, though downside risks include an escalation in trade tensions or a correction in AI-related investment demand," Enterprise Singapore said.
(Reporting by Jun Yuan Yong; Editing by John Mair)
Copyright (2026) Thomson Reuters.
This article was written by Jun Yuan Yong from Reuters and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.