Singapore raised its growth outlook for 2026 after the economy closed 2025 on a stronger-than-anticipated note, with policymakers pointing to a supportive external environment and rising demand tied to artificial intelligence investment.
The city-state's gross domestic product expanded 6.9% in the fourth quarter of 2025 compared with the same period a year earlier, exceeding an earlier advance estimate of 5.7%, government data showed. On a seasonally adjusted quarter-on-quarter basis, GDP rose 2.1% in the October-December quarter, also above the prior advance estimate of 1.9%.
In response to those outcomes, the trade ministry upgraded its projection for 2026 growth from a prior range of 1% to 3% - raising its assessment for the year to a range of 2% to 4% overall. The ministry said the global economy had outperformed expectations in late 2025 and that this momentum would carry through into 2026. It added that the outlook for the manufacturing and trade-related services sectors in Singapore had improved since November.
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 view that inflation was moving towards its 1% to 2% forecast range, and that MAS would monitor global inflation trends closely in upcoming policy reviews. "MAS is now in an appropriate position to respond effectively to any risk to medium-term price stability," he said.
Among private-sector forecasters, Barclays economist Brian Tan raised his 2026 GDP growth forecast to 3.5% from 2.5%. Tan also pencilled in a mild sequential contraction of 0.5% in quarter-on-quarter growth for the first quarter of 2026, pointing to the large swings in the biomedicals sector as a key driver of near-term volatility.
Tan noted that biomedicals output surged to a peak in October and was 201% above the average monthly production level recorded from June to August, before collapsing in December. He cautioned that while a renewed upswing could not be ruled out given the cluster's volatility, "the flash evaporation of that biomedicals windfall already suggests Q1 GDP is set for a sequential contraction," he said.
For the full year of 2025, Singapore's economy expanded 5.0%, a figure that revised upward from an earlier preliminary reading of 4.8% and follows 2024 growth of 5.3%.
Enterprise Singapore separately adjusted its outlook for non-oil domestic exports, upgrading the forecast to a 2% to 4% range from a prior estimate of 0% to 2%. The agency said robust AI-related demand and elevated gold prices should continue to support NODX growth, while warning that downside risks include an escalation in trade tensions or a correction in AI-related investment demand.
This set of revisions leaves policymakers and markets watching two dynamics closely: the sustainability of AI-driven investment flows supporting manufacturing and exports, and the near-term mechanical effects from volatile clusters such as biomedicals that can produce sharp quarter-to-quarter swings in output.