MTI upgrades GDP forecast to 2% to 4% for 2026 amidst strong global economic growth

The city state's Q4 GDP growth of 6.9% and resilient global trade prompted the upward revision of 2026 targets.

Singapore’s GDP growth for 2026 is now projected at 2% to 4%, up from the previous forecast of 1% to 3%, the Ministry of Trade and Industry (MTI) said in a press statement.

The economy expanded 5% in 2025, slightly below the 5.3% growth recorded in 2024, according to MTI.

In the fourth quarter of 2025, the economy grew 6.9% year on year, faster than the 4.6% recorded in the third quarter, MTI data showed.

On a quarter-on-quarter seasonally adjusted basis, the economy grew 2.1%, down from 2.6% in the previous quarter.

Manufacturing, wholesale trade, and finance & insurance sectors drove growth last year, MTI reported with the electronics cluster expanded due to strong AI-related electronics demand.

The machinery, equipment & supplies segment of wholesale trade also grew, whilst finance & insurance saw broad-based expansion.

The food & beverage services sector contracted, partly due to lower restaurant sales.

MTI cited stronger-than-expected global economic growth in late 2025 as a key factor behind the upward revision.

Global trade remained resilient despite US tariffs, supported by lower effective tariff rates, supply chain adjustments, and strong AI-related exports.

Advanced economies are expected to see mixed growth in 2026, MTI said.

The US is projected to maintain stable GDP growth with continued AI investment and fiscal support, whilst the Eurozone may slow due to subdued exports and industrial activity.

In Asia, China’s growth is expected to ease, whilst key Southeast Asian economies benefit from consumption and investment growth supported by fiscal and monetary policies.

Singapore’s manufacturing sector is projected to grow faster than previously expected, supported by strong demand for semiconductor chips and positive spillovers to precision engineering, machinery, equipment & supplies, and aerospace and marine & offshore engineering segments.

Key outward-oriented services, including information & communications and finance & insurance, are expected to register healthy growth, according to MTI.

Domestically-oriented sectors such as construction and real estate are projected to expand steadily.

Consumer-facing sectors, including retail trade and food & beverage services, are expected to remain subdued.