Singapore GDP Rises 5.7% in Q4 2025, Driven by Manufacturing Growth

Singapore’s economy expanded by 5.7% in the final quarter of 2025, according to an advance estimate from the Ministry of Trade and Industry. This marked a significant acceleration from the previous quarter’s 4.3% growth. The expansion was primarily driven by the pharmaceutical and electronic manufacturing sectors, which benefited from strong global demand for AI-related semiconductors and server products.

The full-year GDP growth for 2025 reached 4.8%, outpacing the government’s forecast and making it the fastest growth since 2021. This outperformance surprised analysts, as the initial forecast for 2025 had been set at 1.5% to 2.5%. The government upgraded its estimate in November to 4%, but actual performance exceeded that figure.

On a seasonally adjusted quarterly basis, the economy grew 1.9%, which was slightly below the median estimate of 2.7%. Despite global trade uncertainties and the potential impact of U.S. tariffs, Singapore’s economy showed resilience, particularly in the manufacturing sector, which expanded by 15% year-on-year.

Why Did This Happen?

The manufacturing sector’s strong growth was driven by demand for pharmaceuticals and AI-related products, including semiconductors and servers according to recent analysis. The government also noted a rebound in the construction sector, which helped boost domestic economic activity. While U.S. President Donald Trump’s tariffs on various goods initially raised concerns, their impact on Singapore was less severe than expected.

Prime Minister Lawrence Wong acknowledged the strong performance in his New Year’s message, stating it was a better outcome than expected given global trade frictions and geopolitical tensions. However, he cautioned that maintaining this pace of growth would be challenging and that economic strategies would need to be rethought to remain competitive.

How Did Markets Respond?

The services sector also saw growth in Q4, expanding 3.8% year-on-year, although this was slightly lower than the previous quarter’s 4.1%. For the full year, the services sector grew 4.1% according to business data. Despite this positive performance, Wong emphasized the need to address the challenges posed by trade fragmentation and inflationary pressures according to economic analysis.

The Monetary Authority of Singapore (MAS) is expected to release its latest policy statement by January 30, after receiving one more inflation reading according to market reports. Analysts are watching whether any policy adjustments will be made in light of the strong growth performance and potential future risks according to economic forecasts.

What Are Analysts Watching Next?

The government has maintained a 1% to 3% growth forecast for 2026 for the third consecutive year according to official statements. This range has historically underestimated the actual growth, which hit 4.4% in 2024 and 4.8% in 2025 according to economic data. Analysts are now assessing whether this forecast will be revised upward as the year progresses according to market research.

Prime Minister Wong has outlined plans to reinforce social safety nets and focus on job creation for Singaporeans in the face of rising trade tensions and AI adoption according to policy documents. The government also aims to improve public services in education, housing, and healthcare according to official plans.

Inflation has remained tame, and Bloomberg Economics expects it to stay "benign" throughout 2026 according to economic analysis. However, Wong warned that inflationary pressures may intensify in the future, particularly if global trade relations continue to deteriorate according to economic forecasts.

The manufacturing sector, which has been a key driver of growth, is expected to remain a focus area. The government plans to introduce new proposals to address economic challenges, although details have yet to be announced according to official announcements.

The strong economic performance in 2025 has set high expectations for 2026. While the government remains cautious in its projections, investors and analysts are closely monitoring developments in trade policy, inflation, and sectoral performance to assess the outlook for Singapore’s economy according to market analysis.