S'pore economy grew by 4.8% in 2025, up from 4.4% in 2024

Singapore's economy grew by 1.9 per cent in the fourth quarter of 2025, following a 2.4 per cent growth in the previous quarter.

This growth was stronger than projected, the Monetary Authority of Singapore (MAS) said.

In its Monetary Policy Statement on Jan. 29, MAS stated that growth was largely driven by the performance of the manufacturing and services sectors, which are tied to the global technology cycle.

"Economic activity in Singapore's major trading partners remained resilient in the last quarter of 2025, buoyed by the AI-related investment boom and reduction in trade policy uncertainty," MAS added.

For 2025 as a whole, Singapore's GDP is estimated to have grown by 4.8 per cent, up from 4.4 per cent in 2024.

In the near term, Singapore's GDP growth should be resilient, but MAS warned that uncertainties remain.

For inflation, MAS core inflation rose to 1.2 per cent year-on-year in the last quarter of 2025, up from 0.4 per cent in the previous quarter.

This is reflected increases in the cost of private health insurance and holiday expenses.

Inflation momentum also picked up from low levels across most core goods

and services, which is in line with a rise in regional prices and domestic wages.

CPI-All Items inflation also rose to 1.2 per cent in the fourth quarter, compared to 0.6 per cent in the third quarter.

This is due to higher core inflation and increased demand for cars, which led to firmer private transport inflation.

Favourable starting point

The stronger-than-expected growth in Q4 2025 "has provided a favourable starting point for 2026", MAS said.

Growth in Singapore's GDP in 2026 is projected to moderate slightly from the strong outturn in 2025, with underlying growth drivers remaining broadly similar.

Expansion in the trade-related sectors, especially manufacturing, should be underpinned by continuing near-term strength.

The construction sector, meanwhile, is expected to benefit from a strong pipeline of public and private construction projects.

As such, the domestic economy's output gap should remain positive but narrow at around 0.7 per cent of potential GDP in 2026, from 0.9 per cent in 2025.

However, Singapore's growth outlook is still subject to upside and downside risks, said MAS.

If AI demand accelerates, it would provide a further boost to GDP growth, particularly in manufacturing output and trade-related services.

However, geopolitical conflicts and re-escalation of tariff actions could impair global investor sentiment and disrupt the AI investment cycle.

There is also the possibility of a sharp synchronised correction in AI investment.

As the industry continues to evolve, any shift in market sentiment or investment patterns could have significant implications for real economy growth prospects.

MAS noted that rents for commercial retail space rose more quickly in the second half of 2025.

Consumer demand has also shown signs of recovery, with service and retail sales posting above-trend year-on-year growth.

Although recent outturns could have been partly driven by year-end seasonality, consumer sentiment may have improved as real wages increased.

For 2026, both MAS core and CPI-All Items inflation are expected to normalise to an average of 1.0-2.0 per cent.

MAS said core inflation momentum is expected to rise toward its trend pace, reflecting gradual increases in imported and domestic costs.

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