Singapore Economy Surges 5.7% in Fourth Quarter, Strongest Growth Since 2021

Singapore: Singapore’s economy expanded at its fastest pace in more than three years in the final quarter of 2025, powered by a sharp rebound in manufacturing that lifted overall growth well above expectations.

Preliminary figures released by the Ministry of Trade and Industry Singapore showed gross domestic product grew 5.7% year on year in the fourth quarter, marking the strongest quarterly performance since 2021. The reading was higher than the revised 4.3% expansion recorded in the previous quarter.

The surge was driven largely by the manufacturing sector, which posted a 15% expansion, a dramatic acceleration from 4.9% growth in the third quarter. Officials said the rebound was led by strong output in the biomedical manufacturing and electronics clusters.

Manufacturing accounts for roughly 20% of Singapore’s GDP, making it a key driver of the city-state’s economic momentum.

Growth uneven across sectors

Despite the strong headline number, the recovery remained uneven. Most other sectors, including construction and services, contracted during the quarter, highlighting ongoing pressures outside manufacturing.

Still, the fourth-quarter performance lifted full-year GDP growth to 4.8%, exceeding the Ministry of Trade and Industry’s upgraded forecast of “around 4%” issued in November.

In his New Year’s message, Prime Minister Lawrence Wong described the outcome as better than expected but cautioned against complacency.

“This is a better outcome than we expected, given the circumstances,” Wong said, adding that sustaining the current pace of growth would be challenging amid a more uncertain global environment.

2026 outlook more subdued

Looking ahead, the ministry has projected GDP growth of 1% to 3% in 2026, reflecting expectations of moderating global demand and rising trade risks.

Selena Ling, chief economist and head of group research and strategy at OCBC, said the latest data underscored Singapore’s economic resilience.

She projected growth of around 2% in 2026, assuming manufacturing expansion cools to about 2.2% year on year due to the high base established in 2025.

Trade risks remain a key concern

Singapore’s outlook continues to be shaped by global trade dynamics. The government had earlier warned that 2025 would be a challenging year, citing rising protectionism after US President Donald Trump’s administration imposed tariffs on dozens of countries in April.

Despite a free trade agreement with the United States in place since 2004, Singapore was subject to a 10% baseline tariff, prompting Wong to remark at the time that “these are not actions one does to a friend.”

The risks are particularly acute for Singapore, which is one of the world’s most trade-dependent economies. According to World Bank data, the city-state’s trade-to-GDP ratio exceeded 320% in 2024.

In anticipation of slower growth, Singapore’s central bank eased monetary policy twice in 2025, after warning earlier in the year that zero growth was a possibility under adverse conditions.