Singapore’s economic expansion decelerated in the third quarter of 2026, with GDP growth dropping to 5.4% after hitting a four-year high in the last quarter.
However, the GDP print beat expectations of a 5% growth from economists polled by Reuters.
Government data showed a decline in the country’s manufacturing sector, although this was offset by an expansion in construction. Manufacturing is one of the city-state’s largest sectors, contributing about 20% of its GDP.
Singapore back in August had lifted its annual economic growth forecast as AI-related sectors and exports powered its economy to beat expectations for the first two quarters of the year. This forecast is still mantained.
GDP growth for 2026 is expected to come in at 4.5% to 5.5%, more than double the lower end of its previous forecast of 2%-4%.
This has been the second time Singapore has upgraded its growth estimates. At the start of the year, the country’s ministry of trade and industry had estimated growth at 1%-3%.
Zavier Wong, market analyst at trading platform eToro, forecasts that with this GDP print, Singapore is likely to upgrade its GDP forecasts again this year.
“The first three quarters have already averaged about 6%, with Q2 revised up from 5.9% to 6.2% in this release. For the year to stay inside that range, it means Q4 would have to stop growing altogether, which is unlikely to happen.”
Despite the optimistic outlook, he also pointed out that, “Most households aren’t seeing that growth in their wallets,” as most of the growth in Singapore are coming from the electronics exports and construction sectors.
The GDP numbers come as the Monetary Authority of Singapore held its monetary policy steady, marking a pause after two straight rounds of tightening.
The city-state had tightened its policy in back to back in April and July, citing inflation risks due to higher energy prices.
The MAS still projects inflation will remain high in the near term due to higher energy and food prices, then ease from mid-2027 “as import costs ebb and domestic price pressures stay subdued.”
“The Singapore economy should continue to expand at a firm pace in the immediate quarters ahead, and moderate thereafter as the AI cycle eases from its exceptional pace and global financial conditions tighten,” the MAS added.
Singapore does not use an interest rate to set monetary policy. Instead, it manages the Singapore dollar against a basket of currencies belonging to the country’s major trading partners, allowing the exchange rate to fluctuate within an undisclosed policy band.
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