Singapore’s economy grew 4.2 per cent in the third quarter, higher than the 2.9 per cent advance estimate.

Singapore on Friday (Nov 21) upgraded its economic growth forecast for 2025 to around 4 per cent after a better-than-expected performance in the third quarter of the year.

This is higher than the previous growth projection of 1.5 per cent to 2.5 per cent that was made in August.

The Ministry of Trade and Industry (MTI) expects Singapore’s gross domestic product (GDP) to grow at 1 per cent to 3 per cent in 2026.

MTI had upgraded the 2025 GDP growth forecast in August on account of strong front-loading activities in the second quarter.

This was due to the pause in the US’ reciprocal tariffs, as well as an improvement in the outlook for Singapore’s external demand due to the de-escalation in trade tensions between the US and several of its trading partners.

At that time, MTI had expected global growth to slow down in the second half of the year, with the dissipation of the boost from front-loading activities and the reinstatement of the US’ reciprocal tariffs after the temporary pause.

“Global economic conditions have turned out to be more resilient than expected,” said MTI in a press release.

Singapore’s economy grew 4.2 per cent year-on-year in the third quarter, beating the advance estimate of 2.9 per cent as well as the median forecast of 4 per cent in a Reuters poll of economists.

It also extended the 4.7 per cent growth in the second quarter.

MTI said the expansion in the third quarter was mainly driven by manufacturing, wholesale trade and finance and insurance sectors.

On a quarter-on-quarter, seasonally adjusted basis, the economy grew by 2.4 per cent in the July to September period, compared with 1.7 per cent in the April to June period.

For the first three quarters of 2025, Singapore’s GDP growth averaged 4.3 per cent year-on-year.

Singapore’s key trading partners performed better than expected in the third quarter, said MTI, noting that export growth for China and Vietnam remained robust amid ongoing trade diversion and supply chain adjustments.

The stronger-than-anticipated artificial intelligence (AI) boom supported US economic growth, which in turn supported exports of AI-related semiconductors from the region.

The ministry also pointed to a further de-escalation in trade tensions, with the US-China trade truce extended to November 2026, with a reduced US tariff rate on China.

“Meanwhile, the rollout of the sectoral tariffs on semiconductors and pharmaceuticals has been slower than earlier anticipated,” said MTI.

Trade-related sectors outperformed expectations, supported by the resilience of global trade and Singapore’s trading partners, and strong global demand for AI-related semiconductors, servers and server-related products. 

“This generated positive spillovers to other sectors of the economy, including outward-oriented services sectors such as information and communications, and professional services,” the ministry said.

For the rest of 2025, demand for AI-related electronics should continue to support manufacturing and wholesale trade sectors, while growth for outward-oriented services sectors is expected to remain resilient.