Singapore economy grows 2.9% in third quarter, beats expectations as tariff cloud clears

(Photo credit: ST Photo/Taryn Ng)

Source: The Straits Times

Singapore’s economy beat expectations in the third quarter, supported by resilient activity in the manufacturing and domestic consumer-facing sectors.

The economy grew by 2.9 per cent from the third quarter of 2025, moderating from the 4.5 per cent growth in the previous quarter, according to the Ministry of Trade and Industry (MTI) on Oct 14.

The performance was better than expected, beating economists’ forecast of 2 per cent growth in a Bloomberg poll.

On a quarter-on-quarter seasonally adjusted basis, the economy expanded by 1.3 per cent, slightly slower than the 1.5 per cent growth in the second quarter, MTI said.

In a separate release, the Monetary Authority of Singapore said the economy grew 3.9 per cent in the first three quarters of 2025, faster than the same period last year.

MAS assesses that the output gap should stay positive for the year as a whole.

However, the central bank added that Singapore’s gross domestic product (GDP) growth is expected to “moderate from this above-trend pace in the upcoming quarters as activity normalises in the trade-related sectors”.

“In 2026, GDP growth is projected to slow in line with external developments to a near-trend pace, such that the output gap narrows to around 0 per cent,” MAS said.

Updated official forecasts for 2025 and 2026 will be unveiled by MTI in November.

MAS said continuing global investments related to artificial intelligence would provide some support to the domestic manufacturing sector.

Growth in construction and financial services should be bolstered by infrastructure investment and accommodative financial conditions, it added.

In the third quarter of 2025, Singapore’s manufacturing sector’s growth was flat, slowing from the 5 per cent expansion in the previous quarter, according to MTI data.

Growth was weighed down by lower output in the biomedical manufacturing and general manufacturing clusters, even as the output of other manufacturing clusters expanded. 

But on a quarter-on-quarter seasonally-adjusted basis, the manufacturing sector grew by 6.1 per cent, a turnaround from the 0.7 per cent contraction in the second quarter.

The construction sector grew by 3.1 per cent year-on-year in the third quarter, moderating from the 6.2 per cent growth in the preceding quarter.

(Photo credit: MTI)

Growth during the quarter was supported by an increase in both public and private sector construction output.

On a quarter-on-quarter seasonally-adjusted basis, the sector shrank by 1.2 per cent, a reversal from the 6.5 per cent growth in the second quarter.

Among the services sectors, the wholesale and retail trade as well as transportation and storage sectors collectively expanded by 2.5 per cent from the third quarter last year, easing from the 4.9 per cent growth in the previous quarter, MTI said.

Growth in the wholesale trade sector was driven by the machinery, equipment and supplies segment, while that in the transportation and storage sector was largely supported by the water and air transport segments.

The information and communications, finance and insurance and professional services sectors grew by 4.4 per cent from the third quarter of 2024, extending the 4.3 per cent growth in the previous quarter.

Accommodation and food services, real estate, administrative and support services and other services sectors) expanded by 4.1 per cent from the third quarter of last year, following the 4 per cent expansion in the preceding quarter.

All sectors within the group, except for the food and beverage services sector, grew during the quarter.