The economy of Singapore increased 5.7 per cent in the fourth quarter compared to a year ago, boosting the full-year growth in the GDP to the highest in 2021, with a strong increase in the manufacturing sector and a worldwide boom in AI-related products, according to preliminary government data released on 2nd January.
The trade ministry reported annual growth of 4.8% in the economy in 2025, which is far above its November estimates of 4.0% and a prior range of 1.52% to 2.5%.
The economic growth was 3.7 per cent in the fourth quarter, which was the prediction of economists polled by Reuters.
The trade ministry, in a release, said that growth in the quarter was mainly “because of output expansions in biomedical manufacturing and electronics clusters,” saying the expansion in the tech sector was enhanced by “sustained demand for AI-related semiconductors, servers, and server-related products.”
OCBC economist Selena Ling referred to 2025 as a remarkable year for the city-state that had 4.4% growth in 2024.
This was a great result as a great improvement over earlier projections that had estimated slower growth and the state of a robust global economy and export demand, some of which is front-loading even before countering tariff effects and gains in the major sectors.
Advance estimates by the trade ministry show that GDP grew 1.9% on a quarter-on-quarter seasonally adjusted basis, with the exception of the third quarter.
Prime Minister Lawrence Wong, in his New Year message on Wednesday, stated that the year-end growth was better than anticipated in 2025, but this year, it would be hard to maintain the growth rate.
Wong attributed the previous year’s growth to the late and lower level of U.S. tariffs than anticipated, and a surge in semiconductor and electronics demand driven by AI.
The data issued on Friday did not offer any prospects for 2026. This is a projected growth of 1.0% to 3.0% in GDP, which was projected by the ministry last year.
OCBC is forecasting 2% per annum GDP growth in 2026 (Ling).
In October, during a review, the Monetary Authority of Singapore did not change the monetary policy because growth in the city-state has continued to be strong despite the U.S. tariff challenges. Another policy review will take place later in the month.
In Singapore, the export to the United States is rated at a 10 percent tariff. It is still low compared to the tariffs on its neighbours in Southeast Asia, but there is the issue of sectoral levies, such as a 100 percent tariff on branded drugs.
Extended sectoral tariffs will damage the demand for Singaporean exports such as semiconductors, consumer electronics, and pharmaceutical products. According to the central bank, the three sectors contribute approximately 40 percent of the exports to the United States.
